Calmy-Rey says Swiss won’t capitulate to EU (DON’T USE)

Foreign Minister Micheline Calmy-Rey says Switzerland will not back down over tax and banking secrecy – issues at the heart of a spat with the European Union.

Her comments, in a Sunday newspaper, come as the debate continues in Europe over financial practices in countries which retain banking secrecy.

Calmy-Rey told the SonntagsZeitung that she saw no need for action in response to a question about increased pressure from Germany and other countries over banking secrecy.

A massive tax German tax evasion investigation centring on Liechtenstein revealed last month has also shone the spotlight on fiscal practices in other countries.

Some EU nations – and some members of the Swiss business world – have lashed out at Germany for its suggestion that banking secrecy rules should be scrapped.

“We are not a tax haven,” said Calmy-Rey on the controversy. She added that Switzerland has a different foundation law to Liechtenstein.

Concerning moves to tighten EU rules on withholding tax on savings accounts held by EU citizens – which also applies to non-EU member Switzerland – Calmy-Rey said that this agreement had been thrashed out with the EU after a lot of hard negotiation.

If there were gaps in this it was “not Switzerland’s problem” she said.

Tax breaks

Switzerland’s competitive tax system has also come under scrutiny from the EU, which maintains that 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.

In the interview, Calmy-Rey reiterated – as the government has already said – that Switzerland would not negotiate over this issue and that the country had never gone against the 1972 accord.

But a tax reform as such had not been ruled out, she said – for competition reasons. This would benefit the people and the domestic economy.

She added that further talks with the EU on other subjects, such as energy, would be considered.

Also on Sunday, Gerold Bührer, the head of economiesuisse, the Swiss Business Federation, said he thought that the tax issue would be a long-term dispute with the EU.

Bührer told the NZZ am Sonntag newspaper that if Switzerland backed down, the EU would try and extend its influence to other areas.

swissinfo with agencies

Swiss-EU relations

Switzerland is not a member of the European Union.

The government sees EU membership as a long-term option.

Switzerland is linked to the EU via a series of bilateral accords and the EU is Switzerland’s main trading partner.

In the 1990s debate over Switzerland’s policy towards Europe polarised the national political landscape.