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28. giu 2000 - The Federal Council has taken note of the outcome of the extraordinary meeting of the ECOFIN Council of Ministers and the European Council held in Santa Maria da Feira from 18 to 20 June 2000 concerning taxation of savings income. It appears that the EU has set itself the aim of ensuring taxation of savings income at the latest by 2010 through an automatic procedure of exchange of information. The planned directive will be ratified by the end of 2002 at the latest, as soon as the EU has received adequate assurance in relation to equivalent measures from certain third countries outside the EU, including Switzerland.
In its preliminary assessment the Federal Council has noted that the agreement reached by the Council of Ministers is of a political nature and that its practical implementation remains open on many important points. These concern in particular the inclusion of dependent or associated territories, the details of the exchange of information procedure, the level of the withholding tax and the revenue sharing. The Federal Council also notes that the EU wants to find "equivalent" solutions with other countries and thus recognises that the aim of effective taxation of savings income can be achieved in different ways using coexisting models.
The Federal Council shares the EU’
s view that capital income should be taxed appropriately. For this reason Switzerland has known a system of tax at source (withholding tax) for many years which, together with a moderate rate of income tax, ensures an effective taxation of capital income and at the same time, with banking secrecy, provides appropriate protection of the citizen‘
s privacy. In the Federal Council’
s opinion it cannot be in Switzerland’
s interest to attract transactions whose aim is to avoid any new regulations the EU may introduce. If the EU should agree on the concrete terms of a directive Switzerland would be prepared to look for ways of making such avoidance as unattractive as possible, on condition that she maintains her banking secrecy. In this respect the focus is on examining the feasibility of a withholding tax on interest from foreign capital according to the paying agent principle, in addition to the already existing Swiss withholding tax; a system of exchange of information on an automatic basis is not a feasible solution for Switzerland, however.
s willingness to look for solutions presupposes that the system introduced by the EU guarantees effective and comprehensive taxation of savings income. Such a system should therefore not only be applicable to EU countries and their dependent or associated territories, but also to the main financial centres outside the EU. Finally, for reasons of balance, other open questions concerning our bilateral relations with the EU would need to be solved at the same time.
Once the final draft of the directive is available the Federal Council will reassess the situation. In its evaluation it will lay particular emphasis on maintaining the international competitivity of Switzerland as a financial centre and of its economy as a whole.
28 june, 2000
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