Reuters: Regulatory News: European Commission backs Swiss deals to fight tax evasion

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European Commission backs Swiss deals to fight tax evasion Apr 17th 2012, 14:25 Tue Apr 17, 2012 10:25am EDT * EU tax chief says revised agreements comply with EU law * Semeta's backing was key for tax evasion accords * Deals come amid pressure on Switzerland to loosen bank secrecy BRUSSELS, April 17 - The European Commission gave its blessing on Tuesday to agreements reached with Switzerland that will allow Germany and Britain to pursue tax evaders. Switzerland, bowing to pressure to loosen the bank secrecy rules that helped it build its $2 trillion financial sector, has signed deals with Germany and Britain that would force its banks to levy a tax on client money and pass it to London and Berlin. "These revised agreements are in full compliance with EU law and the work on these agreements demonstrated what is possible with cooperation," Algirdas Semeta, the European Commissioner in charge of tax, told reporters. That seal of approval removes one hurdle to the deals and draws a line under a months-long legal dispute between the European Commission, which designed a pan-European tax evasion framework, and two of the bloc's wealthiest countries. Switzerland hopes the German and British accords could become a model for deals with other EU states, such as Greece, which want to ensure their nationals are not able to escape paying tax that the state needs at a time of tight finances. At the heart of the row with Brussels were existing European Union rules that impose a 35 percent tax on interest earned on its citizens' savings in Switzerland. Germany's agreement is wider and would, for example, apply not only to savings interest, but also to dividends and other forms of income. The Commission, the executive arm of the European Union, had objected to Germany's initial choice of a lower tax rate in its own accord with Switzerland, fearing that this could undermine pan-EU efforts. That rate has now been changed. The Swiss deal with Berlin faces other obstacles, however, as it needs cross-party support in the German parliament but the country's key opposition party is opposed to the agreement. Financial services in Switzerland, dominated by UBS and Credit Suisse, account for roughly 7 percent of the country's national output. The dispute between Brussels and Berlin came as Switzerland negotiated a separate agreement with the United States to improve transparency and settle a dispute over the use of Swiss banks by wealthy Americans to dodge U.S. taxes. Many countries are eager to strike deals, in part because the extra revenue could help them to pare back heavy debts. Link this Share this Digg this Email Reprints

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