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Swiss push for EU tax concessions

Switzerland is pushing for concessions as part of a withholding tax deal with the European Union.

This content was published on March 6, 2003 - 18:04

EU finance ministers are to discuss the Swiss demands on Friday, with Italy and Spain expected to lead resistance.

The Swiss finance minister, Kaspar Villiger, said Switzerland was ready to join an EU-wide agreement on savings taxation, provided Brussels exempted Swiss firms from certain tax obligations.

"We've found compromise on everything except one issue," Villiger said after talks with EU finance ministers in Brussels. "It's the only point which is open. On the others we've found a solution."

In return for agreeing to Brussels' demands to levy a withholding tax on EU citizens' savings in Swiss banks, Switzerland wants a tax exemption for transfers of dividends, interest payments and license fees between Swiss company headquarters and their units in the EU.

Fair?

Villiger's demand would place Swiss firms on an equal footing with their EU counterparts as far as tax breaks are concerned.

"I think it is a fair price for what we have contributed to the solution on the taxation of savings," Villiger said.

But officials said that Spain, Italy and, to a certain extent, France were opposed. Spain in particular says the budget costs will be too high.

Tortuous negotiations

EU officials said they are keen to end years of protracted negotiations on the savings taxation issue, although the date for the measures to take effect has already been pushed back at least a year to January 1, 2005.

European banks have requested more time to comply with the new rules.

Under the plan, 12 EU countries will exchange information about bank accounts held by non-residents in order to prevent them from dodging taxes in their home country.

The three other EU countries - Austria, Luxembourg and Belgium - which have forms of banking secrecy won't have to exchange information, but will instead impose a withholding tax that will start at 15 per cent and gradually increase to 35 per cent by 2010.

Switzerland is expected to follow the same model as those three countries, if an agreement is reached.

The EU's long-term objective is to impose a system of automatic exchange of information across the Union, and is seeking to persuade Switzerland and other non-EU financial centres to do the same.

However, the Swiss have resolutely refused to consider an exchange of information, arguing that it would violate Swiss banking secrecy laws.

swissinfo with agencies

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