EU finalising savings tax deal with Swiss

Taxation Commissioner Frits Bolkenstein presented a report to the Commission on 27 November on the status of its negotiations with non-EU countries on the taxation of savings revenue.

In October 2001 the Council conferred a negotiating mandate on the Commission to agree on effective savings tax deals with a group of non-EU states. Switzerland is the key member of this group, which also includes the US, Liechtenstein, Monaco, Andorra and San Marino. At stake in the talks is the EU's ability to observe the 31 December 2002 deadline for harmonising rules on the taxation of non-residents' savings. The EU's aim is to fight fraud and tax evasion.

To date, no final agreement has been reached with the Swiss. According to the EU's compromise plan, which will be on the agenda of the EcoFin Council on 3 December, Switzerland will levy a maximum 35 per cent withholding tax on EU residents' savings held in Swiss accounts, and "equivalent" measures will be applied by Austria, Belgium and Luxembourg (the three EU states allowed to levy a tax). Over two-thirds of the tax revenues would be transferred to the EU state where the saver resides. Under the proposed deal, Switzerland would also conclude bilateral agreements on exchanging information in suspected cases of tax fraud.

Britain has already voiced its reservations that anything short of an agreement by Switzerland to drop its banking secrecy would weaken the EU's chances of implementing the Directive on taxation at the Union's level.


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