Savings taxation: Berlin’s turn to argue
By Tanguy Verhoosel | Wednesday 07 March 2012
An unnatural alliance has been made at the Council to block, once again, any move forward in the dossier on the taxation of savings income. Germany has joined forces with Luxembourg and Austria, despite the fact that they do not share the same concerns: indeed, Germany is first and foremost preoccupied with saving its Rubik agreement with Switzerland.
The Danish Presidency of the EU confirmed, on 7 March, during a meeting of the Committee of Permanent Representatives (Coreper), that the discussion on savings taxation has been withdrawn from the 13 March Ecofin Council. Copenhagen had hoped to reach a compromise on granting the European Commission a negotiating mandate with several countries, including Switzerland, but Germany has put a ‘reservation’ on this approach.
In particular, the Danish Presidency considers that Switzerland should offer all EU member states the concessions it has made in terms of information exchange between tax administrations firstly with the US and with Germany and the UK under the Rubik agreements.
Copenhagen considers that it is “necessary to act on the level of the Union”. Perhaps the German government fears that this strategy will delay the entry into force of its bilateral agreement with Switzerland, whose ratification by the Bundesrat is already jeopardised by the Social Democrat opposition.
In any case, Berlin is asking for the Commission to first and foremost authorise it to put in place the Rubik system, which lays out the establishment of a liberating withholding tax in Switzerland on many incomes, and to green-light the concessions Germany made to Berne in return.
In particular, Berlin wants the guarantee that is has the right to “facilitate” the access of Swiss operators to its national market of financial services.
In a letter, addressed on 6 March to the finance ministers of the Union, Taxation Commissioner Algirdas Semeta unambiguously expressed doubts on the subject (see
Europolitics4378). Semeta also warned member states against signing agreements with Switzerland as these agreements would not only interfere with the current regulation on savings tax but also with the plan of extending the field of application of said regulation to new products (life insurances, investment funds, etc), and to certain intermediary entities (foundations, trusts, etc).
In a 5 March letter, which he also addressed to the finance ministers, the Director of the influential Tax Justice Network (based in London), John Christensen, supported the Commission’s position and challenged Germany’s position, which he termed “inacceptable,” because it “greatly harms European interests”. The letter stresses that “by authorising agreements, which are in contradiction with the European legislation, we [...] would be giving countries, such as Luxembourg and Austria, a pretext to continue to block” any progress in the field of savings tax within the EU.
The two countries are requesting to be put on equal footing with Switzerland, in other words they are asking to also be allowed banking secrecy – ‘if Switzerland can, we can’, they say.
This brain-teaser is all the more difficult to solve given that Switzerland has announced that it will not discuss savings tax (or corporate tax, which is another issue the EU wants to discuss with Switzerland) until the Rubik issue has been definitely settled. The Swiss Foreign Affairs Minister, Didier Burkhalter, and the Swiss Minister for the Economy, Johann Schneider-Ammann, were quite clear about this in the letter they sent, on 2 February, to the Union’s head of diplomacy, Catherine Ashton. This letter was seen by
The subject will most certainly be debated on 20 March, during the visit to Brussels of Burkhalter and of the President of the Swiss Confederation, Eveline Widmer-Schlumpf.