The Swiss Federal Department of Finance reported on a working dinner held this evening in Berlin between Swiss Federation President Hans-Rudolf Merz and German Finance Minister Peer Steinbrück. The meeting served to underscore the close ties between the two countries in an objective atmosphere. President Merz who also serves as Head of the Finance Department (Minister of Finance), emphasised Switzerland’s position concerning international administrative assistance in tax matters and took the opportunity to demand that all states featured on the lists of the OECD and G20 should be treated on the same terms.

President Merz spoke to the friendly relations and the close economic ties between the two countries, which he felt should be developed further. As a financial centre, Switzerland is attractive for foreigners due to its professionalism, the Swiss franc and the stable infrastructure and not because of tax matters. He firmly rejected the criticism levelled at Switzerland that it is a tax haven.

Finance Minister Steinbrück was assured of Switzerland’s willingness to swiftly implement the decision of the Federal Council of 13 March, 2009 to withdraw its reservation to Article 26 of the OECD Model Tax Convention and to provide administrative assistance in future upon request, even in the case of tax evasion, and to eliminate existing discrimination. However, he also emphasised that Switzerland expects something in exchange for this. In this connection, the Swiss Finance Minister referred both to the German Federal Financial Supervisory Authority’s refusal to allow market access to Swiss financial service providers in Germany and to the question of the taxation of Swiss flight personnel employed in Germany.

Both ministers agreed to revise the double taxation agreement, but recognised that due to the diverse economic ties between the two countries, negotiations will take some time.

The Department of Finance says that President Merz once again underlined the position of the Federal Council in conducting negotiations with countries individually in terms of extending administrative assistance in international tax matters. The Council feels this is more effective than implementing the decision multilaterally.

**EU Savings Tax Directive**

The Taxation of Savings Income Agreement concluded between Switzerland and the EU was also discussed during the working dinner, with President Merz reiterating the Federal Council’s willingness to retain the existing model, i.e. the system of tax retention. The Federal Council continues to reject the creation of a system of automatic exchange of information; nevertheless, Switzerland reportedly is ready to consider improvements in the Taxation of Savings Income Agreement with the EU.