Latest news articles on EU Savings Tax amendments

Go to << previous news Go to more recent news >>

Date Progress on Amended Savings Tax Commentary
16 Mar 2012 Swiss bankers actively helped clients illegally evade tax.

In other news, Angelo Merkel will likely be forced to make concessions with the opposition for the Swiss fiscal pact.

Denial ain't a river in Egypt
Deny, deny and deny again

16 Mar 2012 ii After yielding to IRS, Switzerland has two hopes of maintaining banking secrecy for EU customers. "No hope" and "Bob Hope"... and Bob died a long time ago.Switzerland.
Swiss banking secrecy broken

15 Mar 2012
Swiss shoot foot

Rubik inefficiency
14 Mar 2012
Rubik Icecream
All track of common sense out the window..."

What they hear
Ever wonder why Germany ignores Rubik's major loopholes concerning trusts and foundations?
14 Mar 2012 ii
Rubik goldilocks
Rubik halloween
13 Mar 2012 It's amazing how clueless the average journalist is commentating on the EU Commission's objection to Rubik. For example, this reporter German language has an obtuse wrong opinion about why European Commission objects to the Rubik concept...

English translation English language here.

The Savings Directive provides for cross-border interest before a tax rate of 35%, and the Commission will not see this sentence from Switzerland below. If the tax rate in the Berlin-Bern Convention is raised, the Commission will be satisfied, as has been shown last week. This will probably be necessary in the Austrian case, Waiglein emphasizes, however, that the higher rate applies only the interest income, but not the - gains from share disposals concerned".

What a maroon! He doesn't get it that the EU Commission will never accept Rubik touching interest because Rubik is fulfills the taxpayers obligations, whilst EU savings tax withheld does not. It's not about matching the withholding rates. What was agreed last week, is that Germany will omit interest from Rubik, not raise the tax on interest. Sheesh! Now let's see if Switzerland also agrees to drop interest from Rubik which would invalidate the entire purpose of Rubik, i.e. the guarantee of secrecy.

Rubik Offer

13 Mar 2012 ii Switzerland's Rubik partners totally ignoring the fact that Rubik does npt include trusts and foundations that do not have an immediate identifiable beneficiary, which is more than 95% of these structures such as discretionary trusts. Germany was upset due to the Liechtenstein tax scandals in 2008 caused by foundations circumventing the EU saving stax. Bzut guess what? The same foundations will not be caught by Rubik. Usually one learns from history, but Rubik's partners have had the wool truly pulled over their eyes.
Im with idiot

12 Mar 2012
Rubik Train
11 Mar 2012 Rubik - a tax for dummies
If you're a UK resident with bank account in Swiss bank, just establish a cheap discretionary trust, managed by your Uncle as trustee. A Panama trust for can be set up over internet for a total £350 and similar annual charges. Rubik specifically exempts fiduciary structures where a beneficiary cannot be identified. You are not the beneficiary of the discretionary trust because it is up to your Uncle to decide at his discretion who and when to distribute the loot. When your Uncle, as trustee, eventually distributes the lolly to you, he pays it out as a "consulting fee" - nudge, nudge, wink wink. That won't be in scope of Rubik. Only a moron would be subject to Rubik.

EU Savings tax amendments would catch this sham:
Interest earned by the trust would be within scope of the EU savings tax by deeming you, who initially contributed the assets (i.e. settlor) as the beneficial owner. That is why the Swiss are fighting tooth and nail about omitting interest from the EU savings tax amendments.

Rubik SpongeBob Logic
11 Mar 2012 ii
Rubik Help
Rubik Recovery
11 Mar 2012 ii
Rubik Clear
Rubik intelligence
10 Mar 2012 Rumours that UK will pass domestic law to so that EU withholding tax is regularised, and not transitional as per the EU savings tax directive are clearly ludicrous. This would bypass the EU Commissions objectives as well as maintain Swiss banking secrecy. No EU MS can pass a law, even tax laws that is in direct conflict with EU legislation.

Why doesn't Austria pass the same law for EUSD withheld tax from Luxembourg?

Rubik Circle

9 Mar 2012
Germany agrees to modify Rubik agreement.

Yet Commenting on Semeta’s warning shot, Swiss Finance Minister Eveline Widmer-Schlumpf insisted that the remarks would not result in major changes to the recently negotiated bilateral withholding tax treaties, arguing that the proposed tax provisions were completely EU-compatible and able to be implemented.

It will be impossible for Switzerland to agree to omit interest from Rubik and leave the taxation on debt claims up to the EU savings tax directive (EUSD). Then Rubik would have no purpose in guaranteeing permanent secrecy.

Time and time again Switzerland insists the EUSD has been embedded in Rubik. But this is a flat out lie. They keep focusing on the definition of interest as per the EU savings tax. The withholding tax on Rubik is full & final settlement of tax payers obligations. The Rubik withheld tax fulfills the tax payers liability back home. The EU savings tax is still subject to the future vagaries of the EU Commission, including automatic exchange of information. So what point is there for Switzerland to agree to omit interest from Rubik?? None! That is why Switzerland will act dumb and keep repeating the false mantra that Rubik already includes the EU savings tax.

9 Mar 2012 ii
Follow me

8 Mar 2012

German foreign Minister German language optimistic on Rubik tax agreement.

English translation English language here.

excite goons
Germany excited over Rubik but resorts to blackmail against EU Commission to protect Rubik

However, the Swiss Minister counterpart, Burkhalter, says "I believe very seriously that solutions could be found for the technical problems that were discussed". However, he ruled out renegotiation and Germany has not even asked.

In fact all Swiss politicians have said the agreement won't be renegotiated except for some minor technical changes."

Time and time again, I explain why Switzerland cannot logically agree to concede interest tax to the EU savings tax directive, especially its future amendments:-
  1. Obviously Germany / UK don't mind omitting interest from Rubik. After all they hope to get a few billion very quickly from the agreement... but it takes two to tango. Switzerland also has to also agree.
  2. The "technical" adjustments Switzerland says it will look at relates to the % of withholding on interest, i.e. increase from 26.25% to 35%.
  3. The argument that Rubik already includes the EUSD is fallacious and misleading. The EUSD is not only about the pure definition of interest:-
    • The EUSD withholding tax does not fulfill the taxpayers obligation
    • The EU Commission may yet in future enforce automatic exchange of information via the EUSD.
The single reason Rubik evolved was to head off future automatic exchange of information from the EUSD. So why would Switzerland agree to Rubik if it is still susceptible to the vagaries of the EUSD including automatic exchange of information? Remember the purpose of Rubik is to guarantee secrecy forever. But by deferring tax on interest to the EUSD, forced transparency will always just be around the corner. It would not make sense for Switzerland to agree to the EU Commissions demand for Rubik to omit interest and let the EUSD control what happens on income from debt claims.
8 Mar 2012 ii Austria Finance Minister says they want to conclude a Rubik agreement with Switzerland because "It's taking too long for the EU to implement EU savings tax changes".

Considering, it is Austria that has consistently vetoed the EUSD amendments since 2008, that is the definition of hypocrisy. Additionally, if Rubik is implemented, then Austria wouldn't have to give up its banking secrecy as they would say if Switzerland doesn't exchange info, then we won't.

Secrecy cloak

8 Mar 2012 iii
Rubik bet
Rubik idea
8 Mar 2012 iv
Rubik repeat crash
Rubik monkey repeat

7 Mar 2012 v

Unbelievably, despite the plethora of daily news for months that UK & Germany have been forced by the EU Commission to renegotiate Rubik, the Swiss FM has not seen any indication that the German government wants to renegotiate the agreement between the two countries. Ostriches with their heads in the sand don't usually see much. Scary that this is the leadership Swiss banking industry is relying on.
FM head in sand

7 Mar 2012 iv
Savings Taxation: Berlin's turn to argue.
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 Semeta unambiguously expressed doubts on the subject. 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 "unacceptable," 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 until the Rubik issue has been definitely settled. The Swiss Foreign Affairs Minister, Burkhalter, and the Swiss Minister for the Economy, Schneider-Ammann, were quite clear about this in the letter they sent, on 2 February, to the Union's head of diplomacy, Catherine Ashton.

7 Mar 2012 iii
In November 2011 Eveline Widmer-Schlumpf rudely flipped off the EU and cancelled a meeting at the last hour with EU Commisisoner tax when he came to Switzerland to discuss tax issues. She rather had to meet Minister from Malta to discuss fish exports...

... and then when he tried to reschedule the meeting, she said as she was promoted to President of Switzerland, protocol dictated that she could only meet the EU Commissioner if she met the President of the EU at the same time, because Semeta was a mere Minister.

And now 4 months later, she's shocked that EU Commissioner Semeta is against Rubik and didn't tell her.

Swiss FM

7 Mar 2012 ii Switzerland surprised by EU Commission warning.
Swiss Finance Minister Eveline Widmer-Schlumpf has expressed her surprise at a warning issued by the European Commission regarding tax deals.

“The letter is not addressed to us, and I do not know what Semeta’s intention was,” Widmer-Schlumpf told Swiss national radio on Tuesday. She added that previously, the Commission had clearly stated that the individual nations had the authority to settle bilateral tax matters independently.

“Just weeks ago, German Chancellor Angela Merkel said explicitly that she wanted to finalise the accord soon,” Widmer-Schlumpf said on Tuesday.

How ill-informed is the Swiss Finance Minister. How can she be shocked that the EU Commission opposes the Rubik agreement? Has she not seen the cartoons on this web site for the past few months?

Swiss FM
7 Mar 2012 There is a problem between the EU Commission and Germany about the annex of the Rubik agreement. It relates to the "facilitation" of access, for the Swiss banks to the German market of financial services. Berlin wants to obtain a guarantee that it’s OK, otherwise CH won’t agree to change the Rubik agreement. However the EU Commission's Director General of Internal Market & Services, Michel Barnier, is reluctant to agree.

This problem interferes with the EU Savings Tax debate. DE maintains a "reserve" on the strategy of the DK presidency. If DE doesn’t change its mind by 8th March, no Savings Tax item on the 13/03 ECOFIN agenda.

Germany wants to blackmail EU Commission regarding its objection to "access" of Swiss banks to German markets. However, teh EU Commissioner of tax has retorted very clearly :-

"The concessions that Germany and the UK have made with Switzerland and have namely committed to “facilitating” the access of Swiss operators onto their national market of financial services. It is out of the question for the EU to compromise in the fields that are already covered or could be covered in the future by the “Community harmonisation,” the letter emphasises: “The principle of the exclusive competency of the EU vis-à-vis the exterior must be respected. This could also concern the banking services and investment services.”

6 Mar 2012 European parliament takes a dim view of the so-called Rubik bilateral agreements that Germany and the United Kingdom have concluded with Switzerland and called for the 27 to fight together to combat tax evasion.
Rubik disasters
If 90% avoided EU savings tax using trusts & foundations, then 90% will also avoid Rubik

6 Mar 2012 ii
EU Commissioner of tax officially PDF document English language notifies EU Council that Rubik bilateral agreements cannot overlap EU directives, nor can EU Member States grant external parties access to EU markets.

Final nail in Rubik's coffin

5 Mar 2012

Rubik withholding agreement to be German language revised, taking into account the EU Commission demand that the tax treaty must not include anything affected by the current and future EU savings tax directives.

English translation English language here.
Of course UK & Germany would readily accept EU Commission pressure to drop interest from Rubik! They'd hope to get a large chunk of cash from Rubik. However, why would Switzerland agree to implement a hefty Rubik withholding tax agreement? Rubik's sole purpose was full & final settlement of tax payers obligation. That is impossible if interest is subject to the EU savings tax. The threat of automatic exchange of information would still hang like a sword of Damocles over Switzerland.

4 Mar 2012 ECOFIN adopts conclusions on 27 February 2012 regarding EU fight against tax fraud and evasion.

"The Council and the Commission are invited to rapidly develop concrete ways to improve the fight against tax fraud and tax evasion, including in relation to third countries and to report in June 2012".

Rubik destroyed
"The negotiating directives for savings taxation agreements with third countries [Switzerland, Liechtenstein, Andorra, San Marino and Monaco - Ed] should be rapidly adopted. The Council and the Commission will report regularly on the state of play in this field, starting in June 2012."

The Danish EU Presidency is contemplating submitting this matter, currently held up by Luxembourg and Austria, to the finance ministers, on 13 March. It finds that Switzerland should treat the Union "at least as well if not better" than the United States. Bern has made a number of concessions to Washington on the provision of banking information.

On Rubik-style bilateral agreements with Switzerland:

Bilateral agreements between Greece and other states for the collection of taxes are therefore an important initiative, although in the longer term a European directive would certainly be appropriate."

Aides to the EP president said that only EU member states are concerned, and not Switzerland, with which Athens is considering concluding a Rubik-type deal, the scope of which the Commission would nevertheless like to keep to a minimum.

German Chancellor Angela Merkel said, on 2 March, that "Greece should have the right" to conclude an agreement with Switzerland without first having to await the EU's green light.

3 Mar 2012 EU Commission adopts report on the efficiency of the EU savings tax directive.
2 Mar 2012 Germany increases German language the pressure on the tax dispute Switzerland.

English translation English language here.

Not Innovative

29 Feb 2012 Swiss House of Representatives passes tax cooperation deal with the USA.

One wonders how Switzerland can deny similar agreements with the EU.

Toilet exit
28 Feb 2012 Pierin Vincenz, CEO of the Swiss Raiffeisen bank, is the first Swiss banker to German language call for automatic tax information exchange. Translation English language here.

This story is now reported in several newspapers, such as English language Raiffeisen bank breaks ranks over tax dispute.

Swiss stampede
He says "Last year, Switzerland concluded deals with Britain and Germany that would compel Swiss banks to collect taxes on the assets of clients from those countries unless they could prove they were tax compliant. But the treaties could well collapse under the combined weight of German parliamentary disapproval and legal objections from the European Commission.

Earlier this week, the Swiss government came up with a different plan to police its own banks to make sure that they only took assets from tax compliant sources.

“Suddenly everyone is talking about a clean money strategy and everyone means something different,” Vincenz told the Tages-Anzeiger. “We really have to show that Switzerland is serious about its clean money strategy.

27 Feb 2012

Rubik picker

26 Feb 2012 Austria talks with Switzerland on a Rubik deal.

Regarding the concern of the EC, Fekter stressed that she was confident that the government would be able to iron out any concerns that the commission may have. Last year, similar affray were initiated after bilateral tax deals were concluded between Switzerland and the UK and Switzerland and Germany.

These deals were pertaining to the taxation of savings held by British and German investors in Swiss bank accounts. Undermining Switzerland’s hopes of negotiating further bilateral tax agreements with individual European Union member states, the Commission recently asserted that the treaties are not compatible in their current form with European law. At issue are the longstanding disputes regarding undeclared assets held in Switzerland by EU nationals. The commission argues that the tax deals undermine the objective of the Savings Tax Directive, a mechanism which allows member states to tax certain investments held by residents in other member states and certain third countries, including Switzerland.

The EU is proposing an automatic exchange of tax information to resolve such issues. Commissioner Algirdas Semeta recently insisted that any bilateral agreement that violates the EU Savings Tax Directive or EU agreements with third states is simply “not acceptable.” Banking secrecy must not be allowed to protect tax evaders, he stressed.

Swiss POV

25 Feb 2012 ii
Oscars for CH
25 Feb 2012
Why Swiss banks keep banking secrecy.

"Obviously, a typical Swiss bank customer"

Unlike banking secrecy in other countries, Swiss authorities have only given administrative assistance to other governments in cases of tax fraud, not evasion.

Where’s the difference? According to Swiss law, someone engaged in tax fraud is actively trying to hide money from the tax authorities, for example by falsifying documents. Tax fraud is not illegal.

Tax evasion on the other hand involves forgetting to declare one's assets. Tax evasion is illegal in Switzerland and can result in steep fines, but banking secrecy means banks don’t have to hand over client data to the tax authorities in suspected cases of tax evasion.

24 Feb 2012 iii Cyprus EU presidency will promote pending taxation proposals.

Chase with net

We have assured Commissioner Semeta of our good will to work together with the Commission to promote these issues, she said. Semeta said that “there is a common understanding that we have to continue to work on major taxation proposals which currently in the Council such as the proposal on savings taxation”.

Replying to a question as to whether he expects some of these proposals to be completed before the end of 2012, and if so which, Semeta said that “we all know that tax matters are subject to unanimity in the Council so it is very difficult to predict when the agreement can be reached”.

He further said that “I think that we are very close to final agreement on the savings taxation.

24 Feb 2012 ii
Swiss press skeptical of Swiss clean money tactic.
Rubik zombie
24 Feb 2012
Danish EU presidency push for deal on banking transparency.

Call for talks on sharing savings tax information but Austria and Luxembourg concerned about secrecy. The Danish government is bidding to end a three-year impasse on European Union negotiations with other countries about transparency on taxation of savings. Officials from Denmark, which holds the rotating presidency of the Council of Ministers, have called a series of high-level talks on the issue.

Member state officials dealing in taxation matters met on 2 February, but failed to make sufficient progress to force the issue onto the agenda of a gathering of national finance ministers on Tuesday (21 February). Danish officials hope further preparatory talks will permit it to be considered when the finance ministers hold their next meeting, in Brussels on 13 March.

At stake is the opening of discussions with five non-EU countries on the sharing of savings tax information with the EU. The EU wants to reach a deal with Switzerland and then deals with Liechtenstein, Andorra, San Marino and Monaco.

However, two EU countries, Luxembourg and Austria, have long opposed the opening of negotiations on anti-fraud agreements, because they fear that any agreement would impinge on their own culture of banking secrecy.

Bilateral deals:

Since the end of 2011, pressure has increased on the EU to make some kind of breakthrough on the matter, as the UK and Germany have signed bilateral agreements with Switzerland. These do not require an exchange of personal information and therefore preserve banking secrecy – but the European Commission has said it will challenge the agreements, because they overlap with EU competencies.

Intensifying the urgency of an EU-wide approach, Austria has now announced that it will begin its own talks with Switzerland on a bilateral agreement. The leaders of the member states, who will hold a summit on 1-2 March, are expected to call for negotiating directives to be rapidly adopted.

Taxation of savings income has been deadlocked since June 2009, when national finance ministers called for “rapid continuation of work in order to find constructive solutions”.

The last three countries to hold the presidency of the Council of Ministers tried to make progress but in vain.

The anti-fraud agreements would bring standards in the five non-EU member states into line with the requirements of the inter-governmental Financial Action Task-Force. But they would not be as high as those that would be brought in within the EU and would subject Austria and Luxembourg to a mandatory higher level of automatic exchange of information than the non-EU countries.

Austria and Luxembourg fear that moves to curtail their own banking secrecy would result in a flight of capital to the five non-EU member states if they were not on an equal footing.

23 Feb 2012 iii

Swiss Rubik tax deals are effectively defunct, but zombie refuses to die.
Rubik zombie
"Alpine Frankenstein"

23 Feb 2012 ii

Cabinet moots steps to clean-up tax haven image.

Fool me once

The Swiss government has agreed in principle on extending due diligence requirements of banks and improved legal assistance on tax matters with other countries.
"... Clients would also be required to make a declaration on the fulfillment of their tax obligations in their home countries.

Note that majority of bank accounts in Switzerland are held by fiduciary structures where no immediate beneficiary is identifiable, e.g. discretionary trusts, foundations or establishments. So who then is responsible for signing the self-declaration of these fiduciary structures that the assets are declared back home? The EU Savings tax amendments realises this and therefore deems the settlor or founder as the beneficial owner. So would the Swiss self-declaration procedure be done by these deemed parties as well?

Highly unlikely as Rubik does not deem the settlor or founder as the beneficial owner. In fact this is a loophole of Rubik, and would be a loophole of the self-declaration policy.

In any event, what is the credibility of self-declaration and who is this policy meant to appease?

23 Feb 2012

Wonder why Greece suddenly went very quiet on Rubik, considering how fervent they were clamouring for it a few months ago? A hefty PDF document rap on the knuckles may explain the sudden dearth of news emanating from the Hellenics.
Beat a Greek
"When bilateral tries to usurp EU legislation"

22 Feb 2012 ii

Swiss unveil clean money plan.

Under a clean money strategy, which Finance Minister Eveline Widmer-Schlumpf is expected to present, banks will be obliged to get foreign clients to declare they are compliant with their home tax regimes. "As a bank ,if you have a client give you money you have to trust and believe them. You can't be responsible for whether clients have paid their taxes" said Thomas Sutter, spokesman for the Swiss Bankers Association. The strategy would focus on self-declaration as part of a raft of other measures: "The responsibility for the money must clearly remain with the clients."
Swiss trying to keep pressure off its banking secrecy. One has to doubt that forcing customers to swear that they have declared their Swiss bank account to their home tax authorities will appease demand from the EU Commission for eradication of banking secrecy.

Nudge nudge
"Nudge nudge, wink wink"

22 Feb 2012

Austria Launches Talks On Swiss Tax Deal.

Austria’s Finance Minister Maria Fekter has recently announced that talks on a planned bilateral tax agreement with Switzerland are due to begin in April. An official letter has been sent to Bern, Fekter explained, noting that a meeting with her Swiss counterpart Eveline Widmer-Schlumpf is expected to take place in April.

EU Commission intervention: Alluding to the European Commission’s current opposition to such a bilateral tax deal aimed at resolving the issue of undeclared assets held in Switzerland by Austrian nationals, Fekter underlined her confidence that the Austrian government would be able to iron out any concerns that the Commission may have.

The European Commission confirmed plans at the end of last year to challenge similar landmark bilateral tax deals concluded between Switzerland and the UK and Switzerland and Germany pertaining to the taxation of savings held by British and German investors in Swiss bank accounts.

Undermining Switzerland’s hopes of negotiating further bilateral tax agreements with individual European Union member states, as a means to resolve the ongoing, longstanding disputes regarding undeclared assets held in Switzerland by EU nationals, the Commission recently asserted that the treaties are not compatible in their current form with European law.

The Commission argues that the tax deals undermine the objective of the Savings Tax Directive, a mechanism which allows member states to tax certain investments held by residents in other member states and certain third countries, including Switzerland. Opposed to the anonymity provision, the Commission is continuing to strive for an automatic exchange of tax information.

EU Tax Commissioner Algirdas Semeta recently insisted that any bilateral agreement that violates the EU Savings Tax Directive or EU agreements with third states is simply “not acceptable”. Banking secrecy must not be allowed to protect tax evaders, he stressed.

The bilateral treaty maintains traditional Swiss banking secrecy, by regularizing accounts without, however, disclosing individual identities.

21 Feb 2012
Austria and Luxembourg still veto EU savings tax revision.

It is not understand why ECOFIN does not follow its own PDF document working party recommendations in April 2004, as described in the foreword of this web page page, i.e.
  • to address the extended scope of the Savings Tax Directive as a priority before dealing with the anti-fraud and tax cooperation agreements;
  • to keep the issue of the transitional period separate from the discussions on the amendments to the Savings Tax Directive;

secrecy not dead
ECOFIN MEETING 21 February 2012: The Danish EU Council Presidency still hopes to work out a solution on revision of EU rules on savings taxation. However discussion on this issue was nevertheless taken off the 21 February Council agenda. It will be put back on the table “as soon as possible” provided there is a “realistic” hope of making progress, Copenhagen announced.

A diplomatic source notes that Luxembourg and Austria are not yet ready to waive their veto on opening new discussions with Switzerland on enlarging the scope of this country’s 2004 agreement with the EU. Luxembourg and Vienna first seek assurances that they will be placed on the same footing as the Swiss Confederation and that they will therefore not be forced to abolish banking secrecy if Bern does not have to do the same. Switzerland, however, rules out that possibility.

There is also another legal and philosophical issue, raised indirectly by Switzerland with signature of its Rubik agreements with the United Kingdom and Germany. Can member states conclude bilateral agreements in policy areas where the EU has inherited certain competences (taxation of interest income on savings, in this case) and under what conditions?

“In theory, they are free to go further” – which is the case with the Rubik agreements, since these also concern dividends and capital gains. “But in practice, this is very complex.” The Commission’s legal service has put out a very critical opinion on the Rubik agreements. In short, “this is a huge subject that will have to studied carefully”.

20 Feb 2012
The Swiss finance and business community outright reject the Swiss President's clean money strategy by obliging banks check that their customers have declared their assets.

The head of a leading Swiss business lobby group said on Sunday he was open to a requirement that banks ask clients to declare their money is taxed, but said that asking for proof is a step too far. "I am open to the idea of a self-declaration for foreign customers," Gerold Buehrer, president of the economiesuisse lobby group told the SonntagsZeitung paper.

Buehrer said he opposed isolated action by Switzerland and any move should be coordinated by an international body, such as the Organisation for OECD, Just out of reasons of practicability this is not doable. Buehrer said. "Such a constraint would be tantantamount to a severe disadvantage for the Swiss financial centre," Buehrer said.

The heads of Zurich Cantonal Bank and Credit Suisse, which are among the 11 banks being investigated by U.S. tax authorities, are also open to asking clients for a declaration, but reject a requirement asking for proof.

"Demanding that a client must prove that he has paid taxes is an impossible undertaking," Credit Suisse CEO Brady Dougan told the SonntagsBlick newspaper in an interview.

Zuercher Kantonalbank Chief Executive Martin Scholl told Der Sonntag newspaper that such a requirement would be a "Mission Impossible."

Head in sand
Swiss bankers announce Rubik definitely proceed in 2013!

19 Feb 2012
Clean money: Swiss banks could be forced to carry out checks on the tax status of foreign assets they hold under a new "clean money" strategy being proposed by the finance minister, it was reported on Sunday.

Eveline Widmer-Schlumpf wants banks to go a step further than requiring a tax declaration from foreign customers, according to the Sonntags Zeitung. She wants them to examine suspected cases of evasion to ensure they are respecting the law. Sonntags Zeitung paper described the proposal as "explosive" as banks have so far fought against compulsory checks.

However, it is likely the Swiss finance industry will reject such a draconian step.

With approximately all assets in Swiss banks being undeclared "black money", it is inconceivable that banks will suddenly require their customers to prove that the assets are being declared back home. Clearly, there will be loopholes in this "check customers where tax evasion is suspected". Obviously no bank will then suspect its clients are evading tax.

See no evil
Swiss bankers looking at suspected tax cheats

18 Feb 2012
An immense amount of time, effort and cost has been wasted in trying to get Rubik to bypass the EU savings tax directive. The EU Commission was never going to allow the Rubik to be approved by a Member State. They warned from day 1 that EU legislation takes precedence over bilateral agreements. Yet Switzerland's legal advisers ignored this and ploughed straight on. One has to ask, who advised Switzerland that Rubik did not conflict with the EU directive?
Rubik advisors
"Rubik won't clash with EU savings tax"

17 Feb 2012
The German SPD reiterates opposition to "Rubik.

This article indicates the SPD is unaware that the Rubik is being blocked by the EU Commission. For instance "... Switzerland has an interest in an agreement. It is the Swiss banks' access to the European market.". The EU commission specifically forbids Germany permitting Swiss banks to gain access to German markets.

The German SPD reiterates opposition to "Rubik" The states run by opposition refuse to approve "Rubik" in the Bundesrat

Finance ministers of the Länder led by the opposition met late Wednesday, to define a common strategy on the folder "Rubik". The regions concerned have decided to bury - the Bundesrat - the tax agreement with Switzerland. Unless substantial amendments to negotiate with Bern. "We have defined a list of eight points he will renegotiate with Switzerland. Must make agreement more tightly to limit inequalities between honest taxpayers and those who practice tax evasion, "said Heiko Geue, Secretary General, Ministry of Finance of Saxony-Anhalt, in the former GDR.

Rubik canned
Rubik architects still blind to reality
Among the sticking points, the limitation in the current version of the agreement signed in September by Bern and Berlin, requests for legal assistance to Switzerland to 999 cases over two years. "Only with the purchase of a CD stolen, we learn the existence of thousands of cases!" Protests Borjans Norbert Walter, the Minister of Finance of North Rhine-Westphalia in the weekly Der Spiegel. This point is especially important to the Social Democrats that they will make the reintroduction of a wealth tax of one of their main demands for the elections of 2013.

The states run by opposition also want to tax more the 130 at 160 billion euros (169 francs 208 billion) of capital parked in Switzerland for many years. The current rates - from 19 to 34% depending on the agreement - are unacceptable. "The price of anonymity, it is a rate of 50 to 70% tax!" Walter Borjans requires that an estimated 5 billion the amount to be paid by Swiss banks, instead of two billion under the agreement.

A third difficulty concerns the estate tax. "But in this respect, Wolfgang Schaeuble told us that Switzerland was ready to move ensures Heiko Geue. We want to ensure that the money deposited in Switzerland will be much struck by the estate tax. "

The ball in the Swiss court

The list of grievances of the SPD will be sent to Wolfgang Schäuble by two or three weeks, on condition that he return to the path of negotiations with Bern, Berlin has so far excluded. For the SPD, the ball is now in the court of Switzerland. "Switzerland does she want to protect the money of dictators, the billionaire Greek and German fraudsters? This is the question to be asked by the country, said Norbert Walter Borjans ... Switzerland has an interest in an agreement. It is the Swiss banks' access to the European market - and the country's image. "

On the sidelines of World Economic Forum in Davos in late January, the President of the Confederation Eveline Widmer-Schlumpf had defended the text, explaining that there was not much scope for renegotiation. Only the average number of information searches can still possibly be reviewed, she said.

16 Feb 2012
Rubik under fire from European Parliament.

Rubik cliff
Rubik proponents cannot see road ahead
During the European Parliament’s debate, ahead of the EU summit of 1 March, Catherine Trautmann (S&D, France) lashed out against the ‘Rubik system’ in which Greece is tempted to get involved. Under its Rubik agreements, Switzerland would levy a withholding tax at source, in full discharge of tax liability, on different types of income collected in its territory by German and British non-residents.

Pushed by force of circumstance,” added the French MEP, “Greece finds itself obliged to contemplate a bilateral agreement with Switzerland, like the United Kingdom and Germany”. This would not be a cure-all, though. “Accepting a partial levy on fraudulent investments rather than prosecuting fraudsters is institutional recognition of tax fraud and a bad deal financially speaking.”

Catherine Trautmann went on to say that “the Union should follow the lead of the United States, which has forced Switzerland to transmit the bank data of presumed fraudsters”.

The Danish EU Presidency shares this view. In its recent note on the revision of EU rules on savings taxation, it points out that Berne has made a number of concessions to the US, including on grouped requests for information on presumed fraudsters. Copenhagen therefore considers that it is “important that all EU member states coordinate their positions so as to ensure that Switzerland treats its European partners at least as well if not better than the United States”.

The EU’s 27 finance ministers may debate this matter on 21 February. Meanwhile, Catherine Trautmann turned to the Commission. What does it plan to do now that its services have concluded that Switzerland’s Rubik agreements with Germany and the United Kingdom “are illegal”? What does it propose for the future, “now that its draft directive on savings taxation has been shelved by the Council, and in particular Germany”?

The situation is not quite that clear-cut, however. On the one hand, the United Kingdom and Switzerland have apparently come to an understanding on making “technical” changes to their agreement. These are thought to satisfy the Commission, whose legal service has given a very critical opinion of the Rubik agreements. On the other, the die is not yet cast in Germany. The Länder,most of which are headed by the Social-Democrat opposition, were set to adopt a position on Rubik on the evening of 15 February. So far, they have voiced opposition to the agreement between Bern and Berlin. Lastly, Germany and the United Kingdom are still ambiguous about their real intentions.

15 Feb 2012
London, Berlin and Athens called back into line.

“Encouraged by recent international developments to improve transparency and administrative cooperation” on taxation matters, the European Commission reiterated, on 15 February, that it is “more determined than ever to promote information exchange at the largest scale possible”.

It has accordingly held “very constructive discussions” with Germany and the United Kingdom to make their Rubik agreements compatible with European rules on savings taxation. “We agreed on the need to remove from their scope” all products covered by existing European rules on savings taxation and those that may be covered in the future. “This should enable us to put this problem behind us and concentrate on the intra-EU negotiations” on the taxation of earnings on savings.

At the same time, the head of the Commission’s task force on Greece, Horst Reichenbach, warned Athens that it must not exceed certain limits if it should decide to conclude an agreement with Switzerland. "A tax amnesty is conceivable for the past, for the future, however, the scope of the agreement will have to be limited to dividends, capital gains and wealth tax.” There is also no question of granting Switzerland, in exchange, too many advantages on access to financial services markets (one of Bern’s demands): the Union’s “external competence” in this area must be respected.

This article confirms three things:-
  1. Automatic exchange of information via savings tax will eventually be imposed on Switzerland
  2. Rubik must omit interest, thereby sinking the purpose of Rubik, i.e. avoid exchange of information
  3. Swiss banks will not gain access to markets in Germany & UK
There is simply no reason that any customer of a bank would agree to a Rubik levy on capital gains or dividends if they are still subject to the unknown future affects of EU savings tax directive.

Useless Rubik
Rubik omitting interest has no purpose

14 Feb 2012
Switzerland was jubilant when Germany, UK and perhaps even Greece wanted to quickly sign up to the proposed Rubik tax agreements. There were rumours that Spain could also follow. Now it seems certain the EU Commission's threat of legal intervention has dashed optimism that these agreements will be implemented. Switzerland has even retorted that they will not discuss extensions to the EU savings tax directive unless the EU Commission waives its objections to Rubik. EU Commission in return says it is time to use more stick than carrot with Switzerland.
Return Rubik
Swiss fan regarding Rubik

13 Feb 2012
UK and Germany have agreed with the EU Commission that they will go back to Switzerland to amend the Rubik agreement to ensure it doesn't affect the EU savings tax. This means Rubik must remove the interest module. Switzerland will not agree to this "return to negotiating table" because then it means that the entire purpose of Rubik is defeated, i.e. secrecy is no longer guaranteed and interest income (and hence future capital) is not regularised.
Return Rubik
Give and ye shall receive

12 Feb 2012
EU Commissioner of tax, Mr Semeta, top priority this year is to toughen the EU savings-tax directive further. He hopes to gain a negotiating mandate this month. Mr Semeta insists he is ready to take a harder line with Switzerland this time around and will use “sticks”, not just “carrots”. One such weapon could be to restrict Swiss access to EU markets.
Carrot n stick
EU provides a little encouragement

11 Feb 2012
The EU Commission is skeptical of Rubik's promised benefits being better than the EU savings tax amendments.
snake oil
EU Commission doesn't believe in Rubik, unlike Germany & UK

10 Feb 2012
Several news articles report that the UK & Germany are accommodating the EU Commissions objections to Rubik. However, it is simple to understand why Switzerland does not want to renegotiate the bilateral agreement's terms. The EU demand that Rubik omits anything to do with interest because that is already covered by the EU savings tax. Therefore interest income will not be regularized. That means for interest paid to the UK / German customer by a Swiss bank :-
  1. The income is never regularized
  2. Customer earning interest will be subject to the inevitable automatic exchange of information in future savings tax revisions;
  3. Withheld savings tax on interest does not fulfill the customer's fiscal obligation in their home state, and thus he can still be subject to penalties, etc.
So why would any rational UK / German customer of a Swiss bank accept Rubik's hefty withholding taxes when it doesn't guarantee neither confidentiality nor protection from future fiscal penalties. It just does not make sense for any party to carry on flogging this dead horse. So why do Swiss bankers continue to make public statements that they are confident that Rubik will proceed next year? Go figure...
Up yours
9 Feb 2012 Switzerland blackmails EU to accept Rubik.

Switzerland’s Federal Council has recently announced the next steps for the continuation of bilateral negotiations with the European Union (EU), including in the contentious area of taxation.

Switzerland and the EU intend to take forward discussions on a number of 'dossiers', including in the area of energy, agriculture, health and carbon emissions trading. However, tax is likely to be the most sensitive subject of discussion, with the EU taking a dim view of the tax agreements concluded with Germany and the UK last year enabling British and German citizens to maintain secret accounts in return for paying tax on account income.

Accordingly, the Swiss administration underscored in its statement that Switzerland's willingness to discuss the tax dossiers “requires a correspondingly constructive approach by the EU on the planned implementation of the bilateral agreements with Germany and the United Kingdom on the withholding tax system”. It states: “The Federal Council will continue the talks with the EU on this basis.

Frightening ransom note !
Last November, the European Commission (EC) announced that it planned to challenge the tax deals struck by Switzerland with Germany and the UK, the EC asserting that that the treaties are not compatible in their current form with European law. The Commission argues that the tax deals undermine the objective of the Savings Tax Directive, a mechanism which allows member states to tax certain investments held by residents in other member states and certain third countries, including Switzerland. Opposed to the anonymity provision, the Commission is continuing to strive for an automatic exchange of tax information.

The Swiss administration's statement continued: “Any solution of the institutional issue would have to be compatible with the workings of the institutions of both parties and would have to respect the sovereignty of both sides. Automatic adoption of EU law by Switzerland is not acceptable.”

7 Feb 2012 Social Democrat (SPD) controlled states throughout Germany reportedly plan to block the bilateral tax agreement between Switzerland and Germany in the German Bundesrat, or upper house of parliament, during a crucial vote on 10 February.

Up the Proverbial Creek
According to Baden-Württemberg’s Finance Minister Nils Schmid (SPD), German Finance Minister Wolfgang Schäuble will no longer be able to prevent a defeat in the upper house. Schmid warned that it is “highly unlikely” that the agreement will receive the country’s support.

The treaty maintains traditional Swiss banking secrecy, by regularizing accounts without, however, disclosing individual identities.

Determined to gain support for the treaty from the SPD-led states in the Bundesrat, where the coalition Christian Democratic Union and Free Democratic Party no longer have a majority, German Finance Minister Schäuble had reportedly intended to amend the provisions, to allow more instances of mutual assistance. The current text limits the number of requests for information to 999 over a period of two years.

6 Feb 2012
Swiss Must Kill Bank Secrecy, Revise Deals says EU European Union Tax Commissioner Algirdas Semeta.

Nobel fiction
Rubik better than automatic exchange of info

“Banking secrecy that allows companies or individuals to hide taxes has no future,” Semeta said in an interview in Brussels, adding that he wants to crack down on EU citizens using Swiss bank accounts to hide money. “If we knew the exact amount of tax evaded, we would present a bill to Switzerland.”

Semeta, a former Lithuanian finance minister, has helped stall the bilateral tax agreements struck by the U.K. and Germany by ordering the two countries to redraft segments that clash with existing EU rules.

Ignoring the substantial headwinds, Alfredo Gysi, head of the Association of Foreign Banks in Switzerland said “I’m personally still optimistic. It’s still in the highest interests of all parties involved to find a solution”.

5 Feb 2012 Swiss Will Tighten Rules on Foreign Assets. Switzerland’s government will unveil a new “clean money” strategy at the end of this month.

Secrecy wall
That wall is history

Proposed regulations, to be put forward by Finance Minster Eveline Widmer-Schlumpf, will require banks to demand a declaration from non-Swiss clients that all their assets are properly taxed. Self-declaration by proven tax avoiders, seems a futile public relations exercise by Switzerland to avoid the impeding demand for automatic exchange of information. Even if Switzerland did indeed have a genuine clean-money strategy, the EU Commission will not relent on its demand for Switzerland to accept eventual exchange of information on the EU savings tax.

3 Feb 2012

Switzerland threatens the EU it will not discuss extension to the EU savings tax unless the EU Commission waives its objections to the Rubik agreements with UK & Germany. The EU Council under the Danish presidency retorts that the EU savings tax agreement with Switzerland should be expanded to take into account the concessions and generosity Switzerland has shown to USA, Germany and UK.
CH in a strong position to threaten EU?

Diverging strategic views between Switzerland and the EU may well heighten tension between them. On 2 February, the Danish EU Council Presidency expressed a firm determination to open new talks with Bern on savings taxation. Just the day before, however, the Swiss government warned that it would not enter into such talks if the European Commission did not first waive its objections to the entry into force of the 'Rubik agreements' Bern has concluded with Germany and the United Kingdom.

Copenhagen has convened a high-level meeting of member state experts to review the savings taxation issue. In its view, Swiss "concessions" to the United States, the United Kingdom and Germany on combating tax evasion justify rapid renegotiation of Berne's savings taxation agreement with the EU, to enable all 27 to benefit from Swiss generosity. Bern has agreed, for instance, to relax rules on information exchange on request between tax administrations by authorising grouped requests for information under certain conditions.

According to diplomats, Luxembourg and Austria maintained, on 2 February, their two-year veto on the opening of such negotiations. Article 10 of the EU directive (law) on the taxation of income earned on savings states that they will have to switch from withholding at the source – under which their banking secrecy is safeguarded – to automatic information exchange if the Union and Switzerland seal a deal that entails a reciprocal commitment to apply "OECD standards" on information exchange on request, which are much stricter.

Luxembourg and Vienna continue to stand their ground: they want the same treatment as the Swiss Confederation. Consequently, they wish to see EU legislation adapted before any decisions are taken on extending its scope (to products like life insurance and certain intermediary entities like foundations) and concluding a new agreement with Switzerland.

The two states nevertheless are said to have shown signs of being more open, which will encourage the Danish Presidency to hold bilateral discussions with them before referring the matter to the 27 finance ministers on either 21 February or more likely 13 March.

Luxembourg and Austria have acknowledged that the "international developments" provoked by Switzerland have to be taken into account, meaning that they too could make concessions on providing bank information on request provided they are not obliged to do away with their banking secrecy.

The question is how the EU can reconcile rapid progress with Switzerland on savings taxation with the condition that Bern itself set for the opening of talks, on 1 February, namely the European Commission's green light for Rubik. The EU executive disputes the legality of a number of elements – rate of taxation to be withheld in Switzerland, whether payment constitutes full discharge of liability, etc – of the agreement between Switzerland and Germany.

2 Feb 2012 Denmark, which took over the presidency of the European Union in January, has set its focus on reopening negotiations with Switzerland on taxation issues.

Rubik's design ensured it never flew
The title of this news article Rubik gives EU new hope for Swiss tax accord is misleading. Denmark is not thinking of extending Rubik to all EU Members but is rather looking at incorporating the principal of extending savings tax to "all forms of income". Switzerland has shown it is prepared to withhold taxes on all forms of income as well as exchange info with USA. The EU will now consider incorporating a wider net for the savings tax directive.

It is worth noting that Denmark, like many other EU Member States, seems to be misled by Rubik supposed efficiency, viz. "the memo suggests the scope of application for the accords is very large, covering all income made by investors in Switzerland." Rubik has several major loopholes, namely:-

  • Specifically exempts trusts, foundations, establishments which do not have an identifiable beneficiary i.e. 95% of these
  • Exempts structures which supposedly have a commercial purpose, e.g. untaxed Hong Kong "trading" company
  • Doesn't touch life insurance unit-linked issued by non Swiss insurers, e.g. Liechtenstein or Irish or Luxembourg tax free wrappers
  • Doesn't consider the concept of Paying Agent Upon Receipt (or Distribution)
1 Feb 2012

Liechtenstein's Prime Minister Tschuetscher announces the Liechtenstein-Austrian agreement could follow the same model as the bilateral agreement concluded with the UK, offering clients the opportunity to either legalize or to close their accounts.

smoke n mirrors
LDF doesn't touch vast majority of Liechtenstein's customers

Why is it that Liechtenstein only does disclosure facilities with countries from whom they have an insignificant number of clients, and yet wants a Rubik style agreements with Germany? Note that Rubik loophole would mean there would be no fiscal impact whatsoever on Liechtenstein's untaxed 100,000 foundations, trusts, establishments and companies.

The answer it seems is that LDF is designed to poach customers from Switzerland who are fleeing the more expensive Rubik deals. Liechtenstein's banks never ever had many UK resident clients. Yet the LDF has already attracted a few thousand UK customers, most of which fled Switzerland. This is no problem, yet Liechtenstein is using the LDF as a public relations exercise to say it is shedding its tax haven image. This is far from the truth. The LDF accords are merely a way of attracting other tax haven clients.

The proof that LDF is designed to poach other tax haven customers and not shed Liechtenstein's tax haven status is that the UK has extended the LDF by one year because the UK-resident customers of Swiss banks have delayed fleeing Switzerland whilst awaiting details of the Rubik agreement. And now that they see Rubik is expensive, UK expects the fleeing to continue.

The LDF is a "groundbreaking" amnesty for offshore tax evaders has been extended by a year as part of a deal that underlines Liechtenstein’s efforts to shed its reputation as one of the most secretive havens in the world.

Liechtenstein has agreed to exchange information with the UK under a double tax treaty that will come into force in January 2013. The deal helps Britain ensure that offshore income is taxed while extending a number of UK tax advantages to Liechtenstein’s residents, companies, trusts, foundations and investment funds.

More than 2,000 Britons with undeclared offshore assets have already made use of the Liechtenstein Disclosure Facility, which charges relatively modest penalties for investors wanting to come clean. It will now be available for an extra year, until April 2016.

Revenue & Customs said the decision to extend the facility, which it expects to yield GBP 3bn, reflected its better-than-expected uptake. Dave Hartnett, permanent secretary for tax at HMRC, said: “As the number of disclosures already exceeds the total we originally expected for the whole period of the LDF, we have agreed with the Liechtenstein government that it makes sense to extend the facility by one year to 5 April 2016.”

Tax advisers said the extension of the agreement would compensate for the hiatus that occurred after the UK announced it was negotiating a deal with Switzerland in October 2010. Investors held back in the hope of securing more generous terms from the Swiss deal, which promised to preserve their anonymity in return for paying withholding taxes and a one-off levy.

But when details of the controversial Swiss deal emerged last August, advisers said it would be significantly more costly than using the LDF. Simon Airey of DLA Piper, a law firm, said the cost of interest and penalties under the LDF averaged 10-15 per cent of the investor’s capital.

Fiona Fernie, a partner at accountancy firm BDO, said: “We have seen a steady stream of interest from clients in the LDF since its launch, but given that there are still many people who are only just finding out about this, it makes complete sense to extend it by a year, especially given the uncertainty around the Swiss-UK deal.

30 Jan 2012
Word on the street is that Germany and UK have agreed with the EU Commission to omit interest from Rubik. Switzerland has also agreed to this minor technical adjustment.

melt cube
EU Commission melts Rubik
If Rubik omits interest, then there is no purpose for Rubik. Why should a Swiss bank customer agree to pay one cent of Rubik tax if :-
  1. Interest income remains unregularised;
  2. The EU savings tax withheld on interest does not fulfill the taxpayers fiscal obligations;
  3. The customer could still be subject to future automatic exchange of information as per future EU savings tax amendments.
"Tax experts" who advocate Rubik is like the game cube where one block can be removed and the cube won't fall apart are wrong. If Rubik omits the interest module, then Rubik's reason d'etre is not achieved.

Furthermore EU savings tax amendments do not only affect the definition of interest, but bring in new concepts like Paying Agent Upon Receipt which ensure the Rubik cube is destroyed.
27 Jan 2012 Germany's Finance Minister issued spurious claims that he has successfully appeased the EU Commission on its concerns that Rubik conflicts with the EU savings tax. Schauble claims that the EU savings tax directive is embedded in the Rubik agreement and therefore there is no conflict.

SS rubik
Rubik runs into an obstacle
Schauble's dubious statement claims "The outstanding issues with the EU Commission in terms of collisions with the EU Savings Directive have been answered. "From there it is no more objections," assured the minister. Now the talks with the states, the Bundesrat must approve the agreement would intensify.

It is highly unlikely the EU Commission has agreed to Rubik. The argument that the EU savings tax is embedded in Rubik is completely misleading. The core principles that EUSD does not fulfill the tax payers obligations, that automatic exchange of information on interest is still the aim and that interest is not regularised, ensures that the EU Commission would never give up its objections to Rubik including the interest module.

Note that there has been no statement from the EU Commission corroborating Schauble's claims that the issue has been settled.

A likely explanation of Schauble's statements in claiming that Rubik is not in conflict with the EU savings tax to get rid of the German SPD party objections to Rubik.

26 Jan 2012
"Liechtenstein has a long way to shed tax image", bank chief says. Liechtenstein is negotiating a tax treaty with German authorities that will echo the Rubik accord signed in September by Switzerland and Germany, Liechtenstein Bankers Association Director Simon Tribelhorn said 26.1.2012.

SS rubik
Head far in sand
It seems surreal that Liechtenstein is trying to forge ahead with a Rubik styled agreement with Germany, ignoring the problems Germany is having in getting the agreement approved.

Bare in mind, in 2010 that Liechtenstein withheld less than CHF 10 million EU savings tax on assets of CHF 170 billion, implying that 95% of assets are in foundations, trusts and establishments, which Rubik doesn't touch. Rubik specifically exempts structures where the beneficiary cannot be identified, "An individual resident is not considered to be a relevant person with regard to assets of associations of persons, asset structures, trusts or foundations, if it is not possible to ascertain the beneficial ownership of such assets, e.g. due to the discretionary nature of the arrangement."

In virtually every case of a structure used in Liechtenstein, the beneficiary cannot be identified (i.e. establishment has no shareholders, foundations rarely have named beneficiaries). Therefore a Rubik agreement will have hardly any impact on accounts in Liechtenstein.

Therefore Rubik for Liechtenstein seems to be a PR exercise without teeth in trying to shed its tax haven image.

Furthermore, Liechtenstein is aware that if it manages to ratify a Rubik agreement with Germany, this would disrupt the EU Savings tax amendments. If Liechtenstein wanted to really shed its tax haven image, it would rather throw its weight behind the EU savings tax amendments with automatic exchange of info.

25 Jan 2012 Contrary to widespread belief, Luxembourg and Austria do not object to the amendments to the directive. They fully agree with the technical extension of the directive to close loopholes, such as including entities and legal arrangements, expanding definition of interest, responsibilities of Paying Agents Upon Receipts, etc. Their objection concerns the conditions set out in Article 10 of the existing 2003 directive, i.e. no longer allow to withhold tax in lieu of automatic exchange of information when the five European partners of the directive agree to exchange information on demand according to the OECD standards.

Even though LU and AT agreed to end transitional period when they signed the directive in 2003, LU and AT are now demanding an equal playing field with Switzerland. The reason for this sudden change in heart, is that LU & AT never envisaged that the five European partners would ever agree to exchange info on demand. Therefore they played a poker game by agreeing to end transitional period when the 5 countries agreed to exchange on demand, but have now lost their hand. So they are moving the goal post of an agreement they already signed. Therefore LU / AT will try stop the 5 countries from providing information on demand by :-

  1. not approving the anti-fraud agreement with Liechtenstein which covers exchange on demand, and
  2. vetoing EU Commission mandate to discuss exchange of information on demand with the other 4 countries, and
  3. unrelated to the exchange on demand issue, they are being obstinate for no reason except to punish ECOFIN by vetoing the EU savings tax amendment. This is being done indirectly by not agreeing to the give the EU Commission a mandate to negotiate with the 5 countries the exchange on demand and the revision of savings tax issues.
The EU council has realised that the closure of the loopholes should be a separate issue from the demand for automatic exchange of information on LU / AT. This has been officially PDF document recommended by the Council in the High-level Working Party on Tax Questions.
On the basis of ECOFIN discussions and the Presidency paper, it was suggested:
  1. to address the extended scope of the Savings Tax Directive as a priority before dealing with the anti-fraud and tax cooperation agreements;
  2. to keep the issue of the transitional period separate from the discussions on the amendments to the Savings Tax Directive;
  3. to address the issue of the level playing field in the context of the amended Savings Tax Directive by inviting the Commission to start the negotiations with third countries on the application of the measures similar to those provided by the amended Savings Tax Directive;
  4. to consider the latest compromise text on the amendments to the Savings Tax Directive as agreed so that the discussions on it could be closed in order to provide the Commission with a basis for negotiations.
22 Jan 2012 Rubik deals under threat. The tax deals which Switzerland reached last year with Britain and Germany could yet fail in the face of opposition in Europe and in the countries concerned.
Rubik works by levying a withholding tax on the assets held in the banks. In other words, a tax is automatically levied on the interest they earn, and then remitted to the country concerned. But no information about the identity of clients is provided. And that is the sticking point: the European Union is insisting on “automatic exchange of information”, so that tax evaders can be tracked down.

fox loopholes
Rubik partners ignore loopholes
There is a general misunderstanding in Switzerland that if Rubik is sunk, then automatic exchange of information is immediately on the cards. This is totally incorrect. The EU savings tax amendments have absolutely nothing to do with automatic exchange of information. The EU savings tax revision merely fixes the technical loopholes regarding definition of interest, beneficial owner and Paying Agent. Automatic exchange on Switzerland is a separate issue for another day. Even for LU / AT, automatic exchange is related to the issue of exchange on demand by the 5 European partners, viz. Switzerland, Liechtenstein, Andorra, San Marino and Monaco.
Go to << previous news Go to current news >>