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Swiss Concerned Over Banking Secrecy Sanctions Threat

by Ulrika Lomas, Tax-News.com, Brussels

10 September 2002


The threat of sanctions if Switzerland refuses to fall in line with the European Union's information exchange proposals was raised last week, according to several recent reports.

At a meeting of European finance ministers on Friday, EU Commissioner Frits Bolkestein is said to have hinted that the imposition of capital restrictions on Swiss citizens wanting to invest in the EU is one possibility in the event of Switzerland's non-compliance on the issue of banking secrecy, a suggestion which appears to have worried the Swiss government.

Speaking to AFX News on Saturday, Finance Ministry spokesman, Daniel Eckmann warned that such a move was likely to taint the mood of the bilateral talks: 'If the reference made by Bolkestein was serious, then it would certainly not favour a constructive climate in our negotiations,' he explained.

However, he added that: 'There is light and shade in this, because it seems that automatic exchange of information is no longer the aim of the EU, and Swiss proposals made last Tuesday in Brussels are being taken seriously.'

During the second round of negotiations on banking secrecy, which began last week, the Swiss delegation offered again to introduce a system of tax retention (or 'paying agent tax'), which the government argues represents an effective 'equivalent measure' to the EU's automatic information exchange plans.

The talks also covered the possibility of foreign bank clients in Switzerland being able to choose between the withholding tax or information exchange with the tax authorities in their country of residence, and the possible extension of a clause contained in the - not yet ratified - double taxation agreement with Germany, which allows for targeted information exchange in cases of tax fraud.

A comprehensive report on the future of offshore following the various international initiatives, including the EU's Savings Tax Directive is available in the Tax-News Reports Shop at http://www.tax-news.com/reportshop/

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