As Switzerland’s new economics minister, Johann Schneider-Ammann, visits Rome on Thursday, Italy is giving conflicting signals about bilateral relations.This content was published on November 18, 2010 - 08:46
Schneider-Ammann has said Swiss relations with its neighbours are his priority. Italy is Switzerland’s second most important trade partner after Germany.
According to a news release from the economics ministry ahead of the visit, current issues in bilateral economic relations and policies promoting small and medium-sized enterprises will top the agenda.
One issue that the Swiss are greatly concerned about is a law that came into force on July 1, affecting all countries which Italy has placed on a “black list” of tax havens. Firms domiciled in such countries which want to tender for the delivery of goods or services to Italy now need a permit to do so.
Swiss firms must provide Italy with proof that they are paying taxes correctly in Switzerland. For the Swiss that is a serious barrier to bilateral trade – and a violation of agreements with the EU.
The stumbling block is the lack of a double taxation accord between the two countries.
"As soon as a new double taxation agreement has been reached, Switzerland will automatically be dropped from the black list,“ Amadeo Teti, general director for international trade policy at the Italian ministry of economic development said after a meeting of economics representatives of the two countries in the border town of Como on Monday.
But the negotiation of such an agreement is up to the finance ministries, and the Italian minister, Giulio Tremonti, has been vociferous in his criticism of deals which avoid the automatic exchange of information about bank clients.
He reiterated his position forcefully in Brussels on Wednesday, telling journalists he did not believe the bilateral agreements that Switzerland is about to negotiate with Germany and Britain were compatible with either the spirit or the content of the EU directive on the taxation of savings.
The planned agreements provide for a withholding tax to be levied on assets held by German and British taxpayers in Swiss banks.
In such a case, there would be no automatic exchange of information about bank clients between the two countries, which is what the EU is insisting on, and which the Swiss are anxious to avoid, to protect their banking secrecy.
Rays of hope
Given Tremonti’s hard line, it is not surprising that Swiss-Italian talks on resolving tax issues between them are getting bogged down.
But at Monday’s meeting in Como, Swiss negotiators detected a shift in Italian policy.
Teti hinted that Italy could be open to an agreement like the one signed between France and Switzerland.
That deal, which came into force on November 4, conforms to the Model Tax Convention of the Organization for Economic Co-Operation and Development, which obliges countries to share data relevant for tax collection. But the tax authorities must give good reasons for requesting the information; it will not be provided automatically.
“It’s the first time I have heard Italy talk openly about being ready to abandon the automatic exchange of information between our two countries,” said Michele Rossi, who is soon to represent the interests of Ticino economic organisations in both Milan and Bern. He attended the Como meeting as an observer.
The Swiss are obviously keen to see their country removed from the Italian black list as soon as possible.
Monika Rühl Burzi, who sits on the board of the State Secretariat for Economic Affairs and headed the Swiss delegation in Como, told swissinfo.ch that the measures that Italy had imposed were “disruptive, disquieting, discriminatory and superfluous”.
Teti rejected the claim of discrimination, saying that the measures automatically affected all 70 countries with which Italy had no double taxation agreement.
But Burzi was nevertheless willing to put a positive spin on the meeting.
“My counterpart and I both want to make a strong appeal to our respective finance ministers for the negotiations to start again very soon so they can be concluded as quickly as possible,” she said.
“Switzerland would not be the only winner: Italian exports to the Confederation would benefit too.”
Although the economics ministers cannot solve the tax problem, the Swiss are nevertheless optimistic about the meeting between Schneider-Amman and his Italian counterpart.
Both have only recently taken up office. As Rossi told swissinfo.ch, this means they can “start off a new basis, leaving aside all the tensions of the past”.
But there is a great unknown hovering over their talks. The Italian prime minister, Silvio Berlusconi, faces a vote of confidence in parliament, and it is not at all certain that he will survive in office.
Various possible scenarios are being put forward, including that Tremonti might succeed him.
And that would not be good news to those who want an agreement that is acceptable to Switzerland and Swiss banking circles.
Italy is Switzerland’s second most important trade partner.
It is the third-biggest importer and second biggest exporter to Switzerland.
In 2009 Switzerland imported goods worth SFr18 billion ($18.22) and exported goods worth SFr15.8 billion.
In the crisis year of 2009 trade fell by 16%, but it started to recover again in 2010.
Switzerland is the sixth-largest foreign investor in Italy, while Italy is the ninth-largest foreign investor in Switzerland.
(source: Swiss economics ministry)
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