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EUROPEAN UNION

Bern seeks deal with EU over tax evasion

Switzerland wants "to settle the past" with the EU and begin settling disputes over Swiss bank accounts hidden from European tax authorities, the country's finance minister said Thursday.

Bern seeks deal with EU over tax evasion
Swiss Finance Minister Eveline Widmer Schlumpf. Photo: Remy Stzeinegger/World Economic Forum

"We want to reach an overall deal with the EU," Eveline Widmer-Schlumpf told a workshop on the Swiss financial sector, according to the ATS news agency.
   
Switzerland is pushing for a framework that would pave the way to full negotiations on "bilateral deals to settle the past with all of the important EU countries," she said.
   
Switzerland's deeply engrained banking secrecy practices have long made it possible for foreigners to stash fortunes in the country's banks, out of sight of the taxman back home.
   
Swiss banks now refuse such money, and Bern has been striving to make amends for the past.
   
It recently reached a deal clearing the way for Washington to slap many of its banks with massive fines for past wrong-doings.
   
Widmer-Schlumpf also said on Thursday that Switzerland must quickly move towards the automatic exchange of banking data.
   
"Uncertainty about the rules is the worst situation for the Swiss financial sector and economy," she told some 250 industry insiders.
   
Switzerland last month signed an international tax evasion agreement brokered by the OECD, which contains an optional clause on automatic information exchange.
   
The OECD wants to make this normal practice, and while it remains a sensitive issue for the Swiss, the banking industry and others have begun acknowledging that the country will eventually be forced to scrap its banking secrecy altogether.
   
But despite Switzerland's efforts, the country remains listed alongside well-known tax havens in a new OECD ranking, according to documents obtained by AFP Thursday, a day before the official release.
   
The documents showed that Switzerland had failed even to make it past the first stage of a two-stage assessment on how well 50 jurisdictions comply with rules on tax transparency.
   
Other countries who also did not make it to the second stage include Panama, the Marshall Islands and Trinidad and Tobago, although the OECD's final judgement on those locations was harsher than on Switzerland.

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EUROPEAN UNION

Why any deal between Switzerland and EU lies in the hands of the Swiss

The newly resumed round of negotiations between Switzerland and the European Union is now underway. But even if agreements are signed, stamped, and sealed, this doesn’t automatically mean they will go into effect.

Why any deal between Switzerland and EU lies in the hands of the Swiss

EU chief Ursula von der Leyen and Swiss President Viola Amherd launched negotiations in Brussels on Monday on “a broad package of measures to deepen and expand the EU-Switzerland relationship”, the European Commission said in a statement. (Read more about what’s at stake, below).

“Today is the beginning of a new chapter in our relationship with Switzerland based on a renewed trust and engagement between partners and neighbours,” she added.

This is a positive development after Switzerland suddenly walked away from more than a decade of negotiations in May 2021 due to the EU’s refusal to budge on Swiss demands to exclude key issues relating to state aid, wage protections and freedom of movement. 

The move angered Brussels and strained the relationship between the two sides.

But after nearly three years of tiptoeing around each other, the two parties finally got back to business on Monday.

What does Bern hope to accomplish during the talks?

In a nutshell, these are some of the issues Switzerland will bring to the negotiating table:

Immigration

The majority (1.4 million)of foreign nationals living in — and still coming to — Switzerland are from EU states, so immigration is a hot-button topic.
Wage protection
“The objective of ensuring wage and working conditions by maintaining the current level of protection sustainably will be reaffirmed,” the government pointed out.

Electricity

Swiss government therefore wants to negotiate an agreement with the EU, in order to allow full access for Switzerland to the single market for electricity and “ensure cooperation in this sector with the EU in the future”.

Transport

In parallel with the opening  of international rail passenger transport, the Federal Council will seek to maintain Switzerland’s prerogative to allocate slots on its own territory.

“The controlled opening up of international rail transport must not affect the quality of public transport in Switzerland,” the government said. 

Swiss sovereignty

The government wants to ensure that Switzerland will always be able to decide autonomously whether or not it wishes to adopt European law.
Its direct-democracy system of referendums must also remain intact.
In the event of a dispute, Switzerland and the EU will be equally represented in an arbitration tribunal, which will have to decide.

READ ALSO: What is Switzerland’s deal with the EU?

If both sides agree on these, and other points that are being negtioted, when will new treaties come into effect?

It may take a while, but a better question to ask is: will these agreements be enforced at all?

That’s because when it comes to implementing new laws — regardless of whether they were hatched in Bern or in Brussels — the people will have the last, decisive, word.

Chalk it down to Switzerland’s famous, unique brand of grassroots (or direct) democracy.

Under this system, any new legislation to which any group of Swiss citizens opposes, will come to a referendum.

To do that on a federal level, opponents must collect 50,000 valid signatures within 100 days of the publication of the new legislation. The law will only come into force if it is accepted by a majority of the voters. (Only Swiss citizens over 18 can sign the petitions and vote in national referendums).

READ ALSO: How Switzerland’s direct democracy system works

Do Swiss citizens always vote against closer ties with the EU?

No.

In May 2000, for instance, 67.2 percent voted in favour of the first package of bilateral agreements with the European Union.

And in 2005, 56 percent of voters approved the extension of the agreement on the free movement of persons.

However, in terms of actually joining the EU, the voters have been overwhelmingly against this move.

In 1997 and 2001, more than 74 percent had rejected popular initiatives seeking EU membership.

What about the latest round of negotiations?

It is too early to say, but the opposition to any further links with Brussels is gaining momentum, especially among the right wing — historically a driving force against the EU.

The populist Swiss People’s Party (SVP) is speaking against “the EU submission treaty,” while its sister group, Pro Schweiz, has collected enough signatures to launch a vote on reinforcing Switzerland’s neutrality and, by extension, rejecting anything that smacks of cooperation with the European Union.

It is therefore certain that either or both groups will launch a referendum to stop the government from implementing any more pro-European policies.

This doesn’t mean however, that the Swiss, who are mostly a pragmatic lot, would reject the new agreements at the ballot box — since the majority had already accepted the treaties mentioned above.

Either way, Blick newspaper reported that “it is the Swiss people who will decide whether  the bilateral agreements between Switzerland and the European Union will be finalised.” 

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