Swiss Parliament Approves Savings Tax Measure

by Ulrika Lomas Tax-News.com, Brussels

17 December 2004

The Swiss parliament has approved a plan to distribute some of the proceeds from the EU Savings Tax to the cantons, in a move likely to clear the path towards a final ratification of the Swiss-EU agreement on the sharing of the tax on bank interest between national tax authorities.

The vote in the Swiss lower house on Wednesday reverses an initial proposal to direct all the proceeds from the withholding tax on bank interest to the federal government, and backs a measure supported by the upper house.

Both chambers of parliament are now expected to approve the ‘Bilaterals II’ treaty, which encompasses nine separate agreements with the EU including the savings tax directive, the Schengen agreement on freedom of movement and cross border cooperation on crime, among other measures.

The agreement will mean that three quarters of the revenues raised as a result of the savings tax directive will flow back to EU countries, with the remaining quarter distributed to the Swiss state and Swiss cantons.

The savings tax directive is scheduled to enter into force in July 2005, although there remains some uncertainty over this timetable, with the possibility that opponents to the agreements within Switzerland could force a referendum.

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