The Swiss finance minister, Kaspar Villiger, has held talks on banking secrecy with the European commissioner for taxation, Frits Bolkestein.This content was published on July 3, 2002 - 18:51
The meeting, which took place on Wednesday in Basel, marks the beginning of political discussions between Switzerland and the European Union on the issue of the taxation of EU residents' savings.
The Swiss finance ministry - which has repeatedly stressed that banking secrecy is non-negotiable - said the discussions at the meeting were both "informal and closed".
Bolkestein believes Switzerland - the world's largest "offshore" banking centre holding over SFr1 trillion in foreign assets - is the main obstacle to a proposed EU directive which requires countries to exchange information about the offshore accounts of their citizens.
Under the terms of the proposed directive, EU member states would exchange information on the interest paid to non-residents, allowing individuals to be taxed in their home country.
But some governments, including Belgium and Austria, have said they would not approve the decree unless countries outside the EU agree to similar measures by the end of the year.
Tensions between the Swiss government and the EU over the issue of banking secrecy increased last week when Villiger reacted angrily to comments made by his German counterpart, Hans Eichel. The German finance minister said Switzerland risked isolation if it did not reconsider its banking secrecy laws.
Villiger has offered a withholding tax on savings income in lieu of information exchange with the EU.
"For this reason I vigorously reject the harsh criticism of some of my EU colleagues," Villiger said in response to Eichel's remarks.
Formal negotiations on the issue between Swiss and EU officials began on June 18.
swissinfo with agencies
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