European Union finance ministers have mooted a set of possible sanctions against Switzerland in a dispute over the taxation of EU citizens' savings.This content was published on October 8, 2002 - 18:11
Swiss finance minister Kaspar Villiger said Switzerland "wouldn't understand" sanctions and reiterated that Bern would not alter its position.
However, after days of heated exchange on the issue of an exchange of information to help the EU finalise its tax harmonisation plans, Bolkestein said that any sanctions would only be introduced in 2010.
"Friendly...so be cautious"
"Switzerland is a friendly country, so one should be very cautious," he said in Luxembourg after a meeting of EU finance ministers.
The EU plans aim to prevent tax evasion by EU citizens from both within and outside its borders. Switzerland has insisted that an exchange of information would run counter to its stringent banking secrecy laws, which has prompted the sanctions threat.
The Luxembourg minister, Luc Frieden, indicated three possible measures that could be taken against the Swiss if they did not cooperate on the issue.
These include suspending the current negotiations with Brussels on a second round of bilateral agreements, cancelling the existing agreements with Switzerland and banning Swiss banks from certain operations within the EU.
But Frieden's proposals have met with opposition here in Switzerland.
"We find the talk of sanctions unacceptable and quite out of place," James Nason, spokesman for the Swiss Bankers' Association told swissinfo. "First of all what has Switzerland done wrong? Absoultely nothing. It has not violated a treaty, it's not broken any agreement, it's not violated human rights. It's not Iraq."
However, no decision was taken on Tuesday, with Frieden commenting that talks with Switzerland would continue until December when a decision would be finalised. The "status quo" for the time being would remain, he added.
It was clear at the Luxembourg meeting that not all the ministers agreed with sanctions against Switzerland.
The Austrian minister, Karl-Heinz Grasser, said his country was opposed to sanctions because they would lead to a hardening of positions.
And he said Austria was only prepared to accept the exchange of information on the tax issue if countries outside the EU agreed to do the same.
He also expressed doubts that Switzerland or the United States would accept information exchange by the end of the year.
Offer of withholding tax
Grasser made the point that Switzerland had offered to introduce a withholding tax, an offer that should not be taken for granted.
Banks would be asked to deduct tax liabilities directly from foreign investors' income and repatriate the proceeds to the tax authority of the country of residence.
Nason says this should be enough for the EU and that Swiss banking secrecy should not be brought into question.
"It was the EU who came knocking on Switzerland's door for help," Nason told swissinfo, "and Switzerland has made a very generous offer to help the EU close a potential loophole by offering to extend its withholding tax system."
Hardline British stance
However, the British finance minister, Gordon Brown, took a harder line at the meeting, arguing that Switzerland had to sign up to the EU plans to tax savings.
Brown said that banking secrecy was "not an absolute must" and that he wanted to see progress.
"We are utterly serious about the importance of this issue," he commented.
Villiger was also in Luxembourg on Tuesday at a regular meeting of ministers of the European Free Trade Association, of which Switzerland is a member.
Asked why he opposed the automatic exchange of information on non-resident savings accounts, Villiger commented: "We think we have a better system of automatic taxation and that's a system that is proved and has worked for 60 years in our country."
swissinfo with agencies
EU finance ministers are calling on Switzerland to participate in plans to share information on Swiss bank accounts held by EU citizens.
At a meeting in Luxembourg on Tuesday, they stepped up the pressure by mooting a set of possible sanctions against Switzerland.
Swiss finance minister Kaspar Villiger reiterated that Bern would not change its position.
This article was automatically imported from our old content management system. If you see any display errors, please let us know: firstname.lastname@example.org
In compliance with the JTI standards