Campaigners seeking to subject bilateral tax deals with Germany, Britain and Austria to a popular vote have failed to gather enough signatures to force three referendums on the issue in November.
The Swiss parliament has given a green light to the so-called Rubik agreements, which would impose a retroactive levy of up to 41 per cent on capital in offshore bank accounts held by citizens of the three countries, impose a tax on future interest income and allow the account holders to remain anonymous.
Opponents were hoping to scupper the deals via a referendum scheduled for November 25, but they have failed to submit enough signatures to the Federal Chancellery in Bern.
The initiative was just 1,500 signatures short of the 50,000 needed to vote on the Berlin agreement, 2,500 short on the agreement with London and 3,000 short on the Vienna deal.
The group Action for an Independent and Neutral Switzerland, which has close ties to the rightwing Swiss People’s Party, argues that the deals infringe upon the country’s sovereignty by forcing it to act as a tax collector for other states.
Austria and Britain have already ratified the pacts, which are set to come into force in January in those two countries.
In Germany, however, the deal has yet to pass the Bundesrat upper house, where the centre-right government lacks a majority. The issue has become a focal point of the upcoming German national elections.
The Swiss government has sought withholding tax agreements as an alternative to the automatic exchange of bank information to defend the secrecy that is crucial to the country’s $2 trillion (SFr1.87 trillion) offshore wealth management industry.
Crossroads
Meanwhile, Switzerland continues to struggle to chart a way forward in its working relationship with the European Union. Switzerland is not an EU member but has concluded more than 120 bilateral treaties with the bloc.
On Tuesday, Swiss newspaper Le Temps revealed that Switzerland is meeting tough resistance to its bilateral approach in Brussels, with the European Commission (EC) advising EU members to take a firm line with Switzerland.
The EC approved a document on September 26 analysing, and largely dismissing, proposals submitted by the Swiss in June for inter-institutional relations.
In the internal report sent to the 27 members of the EU, the EC concludes that the Swiss proposals do not adequately address the union’s concerns.
Bern deemed it “not appropriate” to respond to the leaked document, according to Le Temps, as it was “a stage in the internal decision-making procedure of the EU”.
The EU, Switzerland’s largest trading partner, has repeatedly said that the method of bilateral accords, under which the two sides hammer out agreements on individual policy areas, was outdated. It wants an institutional framework to be created so that all accords would be adjusted as necessary to the community “acquis” – the body of EU law.
But Switzerland rejects any measure which would force it to automatically adjust to developments in EU law, seeing this as an attack on its sovereign rights.
The EU has blocked any negotiations on future accords, in particular an agreement on energy policy, until the matter is resolved.
However, the process is far from over. The EU’s expert group charged with monitoring relations with European Free Trade Association countries, including Switzerland, will discuss the issue again on October 11 in Brussels.
The Rubik principle was devised by the Association of Foreign Banks in Switzerland. The project wants to separate income from wealth and hand over tax at the source to third countries, while keeping the Swiss bank account holder’s anonymity.
The inventors of the system say this strategy will also afford more protection to foreign bank employees in Switzerland from legal action by third countries.
It is hoped that guaranteed anonymity will encourage foreigners with assets being managed in Swiss banks to keep them there.