This would mark a victory for the EU’s executive who took exception to the tax accords the UK and Germany signed with the Alpine state ignoring the established EU policy, which mandates member nations to leave out any areas covered by a common European framework while signing bilateral tax agreements with other nations.
EU rules impose a 35% tax on the interest earned on its citizens’ savings in Switzerland and the Commission wants to further widen the rules. Contrary to that, Germany chose to lower tax rate in its own accord with Switzerland, of about 26% on interest accrued on savings.
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Semeta also warned other EU countries from entering into similar agreements if any of the provisions encroach on EU legislation in a recent letter circulated to the finance ministers of all the 27 EU member countries.
Commenting on Semeta’s warning shot, Swiss Finance Minister Eveline Widmer-Schlumpf insisted that the remarks would not result in major changes to the recently negotiated bilateral withholding tax treaties, arguing that the proposed tax provisions were completely EU-compatible and able to be implemented.
In his press briefing, the commissioner insisted that it would be far better to negotiate a collective EU agreement with authorities in Bern, and reiterated calls for EU governments to mandate the commission to do so.
With Germany and Britain falling in line, we now expect other EU countries, which are losing out as much as EUR1 trillion every year through tax evasion, to show greater unity and resolve to collectively take on Switzerland and negotiate a new tax treaty.
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By GlobalDataThe ongoing financial downturn has necessitated greater cooperation on tax policies among EU members and the new found unity will give them an edge over Bern.
The development is yet another jolt for Switzerland that hoped to make German and British accords a model for deals with other EU states.
Now many EU countries which are eager to strike tax deal may demand Switzerland to sign with them a similar treaty they agreed to sign with the US couple of days ago, which could signal the death of Alpine state’s famed banking secrecy.
On March 5, 2012, the lower house of the Swiss parliament voted in favor of an amended US-Swiss tax treaty to rescue 11 banks which are being investigated by the US Justice Department for illegally assisting Americans in the US to hide money offshore.
Under the amended agreement, the US authorities will be able to ask the Swiss to disclose names of the US taxpayers at a bank who exhibit certain "behavioral patterns" indicating tax evasion under US law. Previously, information would only be provided if the foreign tax authorities were in receipt of the name or banking details of the suspected taxpayer concerned.
