Swiss play for time in talks with EU

Frits Bolkestein (left) has called on Kaspar Villiger to start talks on taxation Keystone

The government is refusing to be rushed into talks with the European Union on the taxation of foreign assets.

The finance ministry said it was preparing a response to letter by the EU commissioner, Frits Bolkestein, calling for negotiations to begin immediately on the taxation of savings deposited in Switzerland. The letter arrived in Bern on Saturday.

A spokesman for the finance ministry told swissinfo the authorities were working on a response and would brief the media in due time.

He rejected allegations the Swiss government was trying to buy time by not arranging a meeting between Bolkestein and the Swiss finance minister, Kaspar Villiger, this week.

Not a snub to Brussels

“The fact is it was simply not possible for the finance minister to put off other engagements. But this should not be seen as a snub for the EU,” the spokesman said.

The taxation of savings is a key issue, because it concerns Swiss banking secrecy, and forms part of a series of treaties to be negotiated between Switzerland and Brussels.

The EU wants Switzerland to report all income paid on assets held by EU citizens – something that would contravene Swiss banking secrecy rules.

The Swiss government’s position is that banking secrecy is not negotiable. Instead it has proposed introducing a withholding tax on interest earned on EU assets in Switzerland.

The two sides are also divided on the timing of the talks. Brussels wants to give priority to the taxation issue, but the Swiss say talks can only begin once Brussels agrees on balanced package of negotiations on a total of ten dossiers, including closer cooperation on asylum and security.

The Swiss government office in charge of relations with Brussels confirmed that the next meeting between top officials from both sides is set for an unspecified date after Easter.

Customs fraud

Negotiations are already underway on four issues, including customs fraud. Top negotiators have planned a meeting next week to try and break a deadlock.

Hermann Kästli of the Federal Customs Office said Switzerland was ready to make certain concessions to combat cross-border crime, provided Brussels was willing to reciprocate.

“We are prepared to extend the application of the proposed treaty, but we expect the EU to compromise,” he told swissinfo.

Brussels insists on an agreement aimed at clamping down on all illegal activities which harm the EU’s financial interests, such as cigarette smuggling.

Switzerland says a deal must be based on the Swiss legal system, which treats cigarette smuggling as a customs offence.

However, the Swiss have indicated they are willing to improve legal assistance in cases of illicit trade activities where smuggled goods do not pass through Switzerland.

The Swiss are still awaiting the implementation of a first raft of bilateral treaties with Brussels. Swiss voters approved the accords nearly two years ago.

But ratification was delayed by several EU member states. The agreements are expected to finally come into force by the beginning of June.

by Urs Geiser