Switzerland, Austria and Luxembourg have put their heads together in an attempt to avoid the ignominy of featuring on an international tax fraud blacklist.On Sunday evening, the weather in Luxembourg was damp and foggy – and so too the outcome of the meeting between the three finance ministers: host Luc Frieden of Luxembourg, Switzerland's Hans-Rudolf Merz and Josef Pröll from Austria.
At a media conference at Senningen Castle, the ministers stressed that banking secrecy had to be defended.
"The Swiss government decided on March 6 that bank secrecy will stay intact but also that cooperation would improve regarding tax offences," said Merz, offering a promise of dialogue to Switzerland's critics.
Peter V Kunz, a business law professor at Bern University, said Merz was making a "political statement".
"He has to find middle ground between the international community and Swiss politics," Kunz told swissinfo on Monday.
Underlying Merz's remarks, aimed at his home audience, was this subtext: the three tax havens were willing to talk about how they could better tackle tax crimes. As to what kinds of reforms the three countries are open to, the finance ministers said they were open to ideas.
Last week the British ambassador to Switzerland said the alpine country would not end up on a tax blacklist drawn up by the Organisation for Economic Co-operation and Development (OECD).
But John Nichols told swissinfo that Switzerland's government had underestimated the external political pressure that the 75-year-old tradition has drawn.
« He has to find middle ground between the international community and Swiss politics. » Peter V Kunz "Not acceptable"
Merz says he wants assurances that Switzerland will not end up on a blacklist – a potential outcome of the G20 summit on April 2, a gathering of the world's 20 leading economies. Switzerland was not invited.
Frieden of Luxembourg said he wanted dialogue also. "It is not acceptable to talk about us without talking to us," he said.
One possible concession to the G20 is that Switzerland, Austria and Luxembourg would accept banking secrecy conventions set out by the OECD, a 30-member group containing most of the world's developed economies.
The proposal would have counties like Switzerland cooperate not only on the issue of tax fraud but also cases of evasion, as well as providing legal assistance.
This would mean that Germany for example could ask whether one of its citizens held a bank account in Switzerland if it had grounds to suspect tax evasion, at present not a criminal offence in Switzerland.
"Political hardball"
"The exchange of information will be a possibility, but there will be many others," said Merz but did not elaborate. After the media conference, the finance ministers continued their talks behind closed doors.
Most EU countries already provide each other with data on bank customers automatically. Austria and Luxembourg do not, and Kunz says it would be unlikely the EU would ask Switzerland to live up to standards that are inconsistent even within the 27-country organisation. Currently, Switzerland collects a withholding tax on non-citizens.
« Our goal is that an automatic exchange of information should be avoided because this would be the end of bank secrecy. » Hans-Rudolf Merz Kunz says a withholding tax is a "good offer" and might well be a solution the US could agree to. Even though the three finance chiefs were short on specifics on Sunday evening, they stressed an aversion to any kind of blanket policy.
"Our goal is that an automatic exchange of information should be avoided because this would be the end of bank secrecy," said Merz.
"An automatic exchange would not fly in Switzerland at all," said Kunz, but noted that Switzerland held little leverage.
"If political hardball is played, it can do nothing," he said.
swissinfo, Justin Häne and Simon Thönen
