EU Threatens Sanctions Against Switzerland as Savings Tax Discussions Remain at Impasse

On September 6, 2002, European Union Tax Commission Frits Bolkestein announced the Swiss Government did not agree to adopt equivalent measures to ensure that individuals from the EU are taxed on interest from international investments. Shorly thereafter the EU threatened to impose trade sanctions against Switzerland unless it changes its bank secrecy and tax information exchange laws. The discussions broke down over the issue of information sharing. The Swiss offered to exchange information on request in cases where an individual?s conduct would be criminal in Switzerland. The EU is demanding that the Swiss agrees both to imposing a withholding tax on the savings of EU residents, as well as to a ?meaningful exchange of information.? During a September 6, 2002 meeting of the ECOFIN (finance ministers of the EU) Bolkestein said that international discussions, especially those with the Organization of Economic Cooperation and Development, are progressing favorably on the issue of information exchange. EU finance ministers from the U.K., France, Germany, Spain, and Finland, meetings in Copenhagen during the weekend of September 6, asked the European Commission to prepare a list of possible sanctions to impose on Switzerland if it does not agree to fully disclose information on cases of suspected tax evasion.