Three EU Countries Lift Objection To Swiss Savings Tax Deal

by Ulrika Lomas, Tax-News.com, Brussels

19 May 2004

The three EU member states that last week expressed reservations on a separate deal struck with Luxembourg and Switzerland concerning the savings tax directive, have now dropped their objections to the agreements.

According to reports, EU officials have indicated that France, the Netherlands and Austria have now given their approval to a compromise deal worked out between the EU, Switzerland and Luxembourg allowing these countries to adopt the directive whilst retaining a degree of banking secrecy.

The compromise, reached at a meeting last Thursday, ensures that Switzerland will provide legal assistance under the terms of the Schengen agreement in cases relating to indirect taxes such as customs, VAT, and alcohol and tobacco levies, but will be exempted from providing such assistance in cases involving direct taxation.

Luxembourg, which had voiced concerns that a separate deal with the Swiss would harm its own banking industry, has reportedly been assured that it will not be required to make any sacrifices in terms of banking secrecy which Switzerland and other countries are not also prepared to make.

The agreement clears the way for Switzerland, Austria, Luxembourg and Belgium to begin taxing the savings of EU residents from January 1 next year.

However, reports have suggested that the Swiss government is highly unlikely to have the measure in place by this date, as parliamentary approval may take up to 14 months.

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