Switzerland's recent decision to fall into line with international tax regulations is a step in the right direction, says the European Union's ambassador to Bern.
Michael Reiterer, an Austrian whose official title is European Commission head of delegation to Switzerland, also tells swissinfo about the importance of dialogue and mutual respect.
On March 13 the cabinet relaxed Swiss banking secrecy laws to fall into line with standards set by the Organisation for Economic Cooperation and Development (OECD).
The decision will permit the exchange of customer information with other countries in individual cases where a specific and justified request has been made. Switzerland had previously refused to commit to the OECD standards for fear of compromising banking secrecy rules.
swissinfo: What is your reaction to the Swiss decision to relax its banking secrecy laws?
Michael Reiterer: It was a notable step in the right direction. But even more important is understanding the international dimension of this decision. It's not just about Switzerland's relationship with the EU but also with the OECD and the G20 [the 20 most influential countries in the world which are meeting in London on April 2 to discuss coordinated sanctions against tax havens].
It's also about more than just making it impossible to hide money in Switzerland. We did exactly the same thing in Singapore and Hong Kong. If people bear this international dimension in mind, they won't feel quite so persecuted – as, it seems to me, the Swiss feel.
swissinfo: Switzerland's biggest fear was finding itself on an OECD and G20 blacklist of tax havens. Has the government done enough to avoid this?
M.R.: That I can't say. The G20 isn't the EU – other parties are involved, such as the United States, China and Japan. But this discussion has achieved a global movement towards the OECD standard. Article 26 of the OECD Model Tax Convention [the most widely accepted legal basis for bilateral exchange of information for tax purposes] is increasingly popular and widely accepted.
I believe that if we all move in this direction as a group, it won't be so important who's on which list – black, grey or white. Ultimately it depends on the result.
swissinfo: Relations with Germany are tense following the recent slanging match between Swiss politicians and German Finance Minister Peer Steinbrück. What's your reaction to this spat?
M.R.: It affects the bilateral relations between Switzerland and an EU member state, and therefore as an EU ambassador, I'm restraining myself. Since I've held this post – almost two years now – I've always worked to promote an atmosphere of dialogue and mutual respect. I believe that such a basis enables all the issues to be discussed – it doesn't matter whether there are differences of opinion.
As for Switzerland and the EU, we have existing treaties for the taxation of interest, Schengen [security], fraud – we're well set up.
In the European Commission we now want to seal the double-taxation accord, which refers to Article 26. We also want existing treaties to be revised and new agreements to be reached, for example, over the exchange of information and an anti-fraud agreement with Liechtenstein. We have our agenda and we have clear ideas on how to carry it out.
swissinfo: The government would like to adapt or even cancel the taxation of interest accord with the EU. What do you make of that?
M.R.: The automatic exchange of information and the taxation of interest accord belong together. In the EU there are 24 states that deal with the exchange of information and three of which have a taxation of interest accord based on the guideline.
If there are things on Switzerland's chest, it can obviously bring them up and we'll discuss them. If I understand it right, Switzerland doesn't want the automatic exchange of information – it wants to provide greater administrative assistance. But that isn't an exchange of information and stands opposite the taxation of interest.
swissinfo: So Switzerland can't have both a taxation of interest accord with a reduced withholding tax and no automatic exchange of information?
M.R.: If it comes to adaptation of the taxation of interest accord, that's what it comes to. I can imagine that happening, since within the EU we're working towards involving not only physical bodies but legal bodies such as trusts and hedge funds.
If we reach an agreement in the EU, we'll certainly approach Switzerland. And if Switzerland has requests, it will be able to put them forward.
swissinfo: Switzerland is coming under increasing international pressure. Would its position be stronger if it were in the EU?
M.R.: I'll happily leave this assessment to the Swiss. It's true that a well-coordinated group of 27 states has more influence at an international level. But that's for the Swiss to decide – I'm certainly not going to make any recommendations.
swissinfo-interview: Andrea Arcidiacono
The 53-year-old Austrian from Innsbruck is the first-ever EU ambassador to Bern.
The "EU embassy" officially opened in the Swiss capital on April 3, 2007.
Reiterer served as deputy head of the delegation of the European Commission to Japan for four years.
Since 2005, as well his diplomatic activities, he has been a lecturer on international relations at Innsbruck University.
Reiterer is the author of two books on relations between Asia and Europe and on asylum law.
He is married and has a daughter.
Switzerland's competitive tax system has come under scrutiny from the EU, which maintains tax breaks attracting foreign companies contravene the 1972 Free Trade Agreement between Bern and Brussels.
The main bone of contention is that cantons give foreign firms with holding companies based in Switzerland preferential tax privileges by exempting tax on profits generated outside the country. The EU has called on Switzerland to give up the tax practice and adapt to its demands.
Switzerland has so far refused, pointing out that the same tax breaks also apply to many domestic companies and that it has not signed up to the EU's tax code of conduct. It also says the Free Trade Agreement does not apply to taxation issues.