EU asks Swiss to revise savings tax deal

EU asks Swiss to revise savings tax deal
Algirdas Semeta. Photo: AFP
The European Union has asked Switzerland to open talks on updating a 2005 deal on taxing the savings of EU citizens held in the banks in the Alpine nation, the Swiss finance ministry said Wednesday.

Finance Minister Eveline Widmer-Schlumpf received a written request from Brussels, the ministry said, ahead of a visit to Switzerland on Monday by EU Taxation Commissioner Algirdas Semeta.

With the financial crisis having thrown the spotlight squarely on the issue of tax evasion, EU nations have been seeking to extend the net of their revenue services.

On May 14th, the bloc's 27 member states gave its executive body, the European Commission, a mandate to negotiate with non-EU Switzerland and other countries in an effort to expand the remit of current deals to tax the interest earned on savings.

The EU has said its goal is to have third countries adopt the same kind of automatic exchange of customer information as is planned within the bloc itself.

The tax evasion issue has sparked bitter debate within the EU itself, though resistance by Austria and Luxembourg to the automatic sharing of bank records has been chipped away, five years after other member states approved new rules.

Switzerland remains staunchly outside the EU but is surrounded by the bloc's members and has tight economic ties with them.

Its financial sector is a traditional refuge for foreign depositors in tough times.

Often criticised for allowing EU residents to stash what may be undeclared cash in its banks, Switzerland in 2005 agreed with the EU to tax the savings of such depositors and pay the funds anonymously back to member states.

The original 20-percent tax rate rose to 35 percent in July 2011. 

Switzerland keeps a quarter of the funds to cover its collection costs, while the remainder is handed over to the depositor's homeland.

On Tuesday, Switzerland announced that it had paid EU members 462 million Swiss francs (384 million euros or $496 million) in 2012, an increase of 21 percent on the 2011 figure.

Germany received 143 million francs, Italy 81 million, France 71 million and Spain 46 million.

Semeta's homeland, Lithuania, was bottom of the list with 206,000 francs.

EU residents can also choose not to be taxed by the Swiss, provided they declare their interest income to their home country's revenue service.

A total of 61,000 opted to do so in 2012, up from 47,000 in 2011 and 38,000 in 2010.

Only interest in the purest sense is taxed, but Brussels wants to widen the net to cover dividends from shares as well as potential capital gains from share sales.

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