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No Vote Needed For Swiss Tax Deals

by Ulrika Lomas,, Brussels

04 October 2012

Switzerland will not now hold a November referendum on the landmark tax deals brokered with Germany, the UK, and Austria, as an initiative submitted by opponents of the treaties failed to obtain the required number of signatures to force a vote.

Following adoption of the bilateral tax agreements by Swiss lawmakers back in June, the Conservative group ‘Action for an Independent and Neutral Switzerland’ (AUNS) and the young Social Democrats began gathering signatures in an attempt to trigger a referendum on November 25.

Determined to prevent entry into force of the legislation, AUNS argues that Switzerland has granted too many concessions and has given up the Confederation’s traditional system of banking secrecy. In contrast, the young Social Democrats insist that the accords contain too many loopholes and that the provisions are too lenient for tax evaders.

Switzerland’s agreements with Germany, the UK and Austria aim to resolve the long-standing issue of undisclosed Swiss bank accounts by providing for a tax on the income of foreign account holders with assets held in Swiss banks and for the taxation of existing undeclared and untaxed assets.

Given that Austria and the UK have already ratified the agreements, the provisions will now enter into force as planned on January 1, 2013.

Despite the latest reprieve, the bilateral tax agreement negotiated with Germany still hangs very much in the balance. Opposition parties have threatened to veto the text in the upper house of parliament, or Bundesrat, where the black-yellow coalition no longer has a majority. Germany’s Social Democrats and Green Party are calling for further concessions from Switzerland before backing the legislation.

Unwilling to bend to mounting pressure, Switzerland has firmly ruled out the idea of holding any further negotiations, however.

Welcoming the fact that there will not be a Swiss referendum, Austria’s Finance Minister Maria Fekter stressed that there are now no further obstacles to entry into force of the tax treaty signed back in April.

Fekter said: “This is a good day for Austria. The Austrian government will now be receiving the taxes it is owed.”

The Austrian government has provided for EUR1bn (USD1.3bn) in additional tax revenues from the tax agreement in its 2013 budget.

TAGS: tax | investment | offshore confidentiality | law | banking | United Kingdom | offshore | agreements | legislation | offshore banking | banking secrecy | withholding tax | Austria | Germany | Switzerland

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