The EU Meets Switzerland Again Today On Savings Tax

by Ulrika Lomas, Tax-News.com, Brussels

31 October 2002

Just days after the US administration reaffirmed its opposition to the European Union's plan for the exchange of information on income from savings, senior officials from the European Commission and the Swiss government are due to meet today to continue their fraught negotiations over Switzerland's inclusion in the plan. Without the participation of Switzerland or the US, two of the dominant global destinations for savings cash, the most likely result of the information exchange system would be to do severe damage to those countries that did join it. And almost all of them have said they won't join without Switzerland.

Robert Verrue, the director general of the Commission's taxation department, will go into the ring today with Robert Waldburger, the Swiss government chief negotiator on tax issues. But even before the US made its position clear, Switzerland had refused to go along with the EU's plan, saying only that it was prepared to strengthen its existing system of withholding taxes on income paid to non-residents.

It's unclear whether the EU will now continue to try to browbeat Switzerland into submission by continuing with the threats of financial sanctions which have infuriated the Swiss and neighbouring Liechtenstein, or whether the Commission will now start to focus on damage limitation by negotiating improved withholding tax terms.

Eventually there will have to be a political decision from the EU's Council of Ministers, but with the clock ticking towards the EU's self-imposed December deadline for confirmation of the information-sharing directive, there is no incentive for the Swiss to do other than sit on their hands while the EU squirms.

Recommended