Switzerland rejects EU tax demand

Attempts to find a compromise between Switzerland and the EU are flagging swissinfo C Helmle

Switzerland has dismissed European Union demands that it sign a treaty aimed at combating tax evasion.

In a meeting in Brussels on Tuesday, EU finance ministers said the time had come for Switzerland to agree a tax cooperation accord with the 15-nation bloc.

But Swiss finance minister Hans-Rudolf Merz rejected the latest EU appeal, saying that Switzerland would not sign the accord until stalled negotiations on closer security cooperation and tax fraud had been concluded.

The Swiss president, Joseph Deiss, reiterated that the government wanted agreement on a package of nine bilateral treaties.

Hardening stance

The EU is resisting Switzerland’s attempts to link the tax evasion issue to the other nine treaties.

“It’s a clear, common position,” said Germany’s finance minister, Hans Eichel. “We won’t accept linkage between questions that aren’t related.”

“There’s no question of linking subjects which have nothing to do with each other,” echoed his French counterpart, Francis Mer.

Merz said he understood Brussels’ motives but added that Switzerland also had interests to consider.

“For the moment, it would be absolutely wrong to sign the agreement on savings tax,” said Merz.

He said the government had to stick to its decision to deal with the second set of nine bilaterals as one package.

The ball was in the EU’s court, he said, and it was up to Brussels to take the first step over the Schengen negotiations on cross-border crime.

But René Schwock, professor at the Graduate Institute of European Studies at Geneva University, said Switzerland was in no position to call the shots.

“Switzerland’s negotiating position is becoming weaker and weaker, because they are being pressured by both the European Union on the one hand… and conservative elements in government and the bankers in Switzerland on the other,” he told swissinfo.

Banking secrecy

Since beginning bilateral negotiations, Bern has insisted on the dossiers being treated as one package while the EU favours a dossier by dossier approach.

Last year, Switzerland agreed to introduce a withholding tax on EU residents’ savings in Swiss banks.

However, negotiations on Schengen are at a standstill because Switzerland wants an opt-out in the area of judicial cooperation.

Bern fears that banking secrecy might be compromised by the exchange of information between police and justice authorities. Brussels is refusing to budge on this issue.

The Swiss foreign minister, Micheline Calmy-Rey, said recently that it was agreement on all or nothing.

“Micheline Calmy-Rey and Swiss officials want all the dossiers to be linked, because otherwise they fear that Switzerland will just have this agreement and will not be able to negotiate on other serious agreements with the EU,” said Schwock.

Compromise

Karl-Heinz Grasser of Austria said treating the issues together would make negotiations extremely complicated but he was nonetheless confident that an agreement would be reached.

Merz is also convinced that a compromise is possible and said the next few months would be decisive.

The EU needs to wrap up negotiations on savings tax before the end of June so that the new laws can come into effect on January 1, 2005.

The Union is still trying to conclude agreements with Andorra, San Marino, Monaco and Liechtenstein on this issue.

swissinfo

Key facts

The Swiss government wants concessions from Brussels in return for joining the EU’s new tax regime.
The tax deal would involve Switzerland transferring a levy on EU residents’ savings income in Swiss banks to Brussels.
Bern is seeking to conclude nine other agreements governing issues such as cross-border fraud and asylum.
In Switzerland, a referendum may need to be held before the accords can be implemented.