Breakthrough in Talks with Switzerland

The European Union on Thursday finally overcame internal differences to clear the way for Bern and Brussels to sign a set of nine bilateral treaties. These will give Switzerland membership of the Schengen agreement - which would allow it free movement of people across the EU borders - but with an opt-out on sharing information about tax evasion. Switzerland was concerned these would threaten banking secrecy. In return, Switzerland will sign up to the EU’s savings tax directive and levy a withholding tax of 35 percent on EU residents’ savings income in Swiss banks. Switzerland had refused to sign the deal on taxation until the EU gave Bern an exemption on a part of another treaty – Schengen – to protect banking secrecy. On Thursday, EU members finally overcame their own differences, and agreed to grant the Swiss this opt-out. The EU's member states assured Luxembourg they would not be forced to abandon any banking secrecy rules which Switzerland would be permitted to keep. Switzerland has also promised to pay 650 million euro over five years to support the economic and social cohesion of the enlarged EU. The Swiss federal government will meet on Monday to discuss the bilateral deal, which could then be signed at the EU-Swiss summit next week, on Wednesday 19 May. (EUobserver.com)