Switzerland And EU Restart 'Bilaterals II' Talks

by Ulrika Lomas, Tax-News.com, Brussels

21 June 2002

Bilateral negotiations between Switzerland and the European Union began again on Tuesday on almost exactly the same footing as that upon which they ended earlier this year.

The first set of bilateral treaties designed to enhance ties between the low tax jurisdiction and the 15 nation bloc came into effect earlier this month. However, talks on the second set of accords fell apart when the two sides failed to reach an agreement over a framework for negotiations.

With the deadline for agreement on the EU's savings tax information exchange initiative fast approaching, the whole process could be in jeopardy if the European body fails to persuade non-member states such as the Crown Dependencies (Jersey, Guernsey and the Isle of Man), the United States, and of course Switzerland, to agree to information exchange on savings interest for non-resident bank accounts.

Therefore, the European Union is keen to negotiate the cross-border crime dossier (which addresses the banking secrecy issue) first, leaving the other nine negotiating mandates on hold. However, the Swiss want all ten dossiers negotiated as one package, which is partly why the 'Bilaterals II' negotiations fell apart last time.

However, despite reporting that both sides continue to hold the same positions as before with regard to banking secrecy, a statement released by the Swiss government this week appeared remarkably upbeat about the prospect of continued and mutually beneficial discussion:

'On its side, the EU expressed its wish to see Switzerland accept the practice of automatically exchanging information, after a transitional period; however Switzerland again refused such a model,' the statement on Tuesday's meeting revealed.

However, referring to the European Union's desire for 'equivalent measures' to be taken by non-members in order to pacify financial centres which are members of the Union, such as Austria and Luxembourg, the Swiss Finance Ministry explained that: 'The first meetings helped above all to present the withholding tax as an equivalent measure.'

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