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Austria about to close Swiss tax loophole

The contested Swiss-Austrian taxation will be finalised tomorrow (Fri), the Austrian government officials have revealed.

People’s Party (ÖVP) Finance Minister Maria Fekter said today that the bilateral agreement would be signed in Bern tomorrow. Fekter told Austrian radio station Ö1 that she intended to fly to the capital of Switzerland to finish off the cooperation with Swiss Finance Minister Eveline Widmer-Schlumpf.

Already yesterday, Austrian Social Democratic (SPÖ) Finance Secretary Andreas Schieder explained that a settlement could be reached within the coming days. He remained rather vague concerning how much Austrians’ money in Swiss bank accounts would be taxed. Schieder said the range of taxation might be slightly lower than the percentage rates agreed between Swiss and German government officials regarding Germans’ assets in Switzerland some weeks ago. The countries’ governments decided on a tax rate of 34 to 41 per cent.

Fekter said today that if the tax rate of Austrians’ money in Switzerland would depend on several factors such as how long they had kept it there. Another essential factor will be whether the alleged tax fugitives tried to evade paying income taxes or if they just avoided capital gains taxation. Fekter is currently in Lisbon to meet with members of the Portuguese government. Austrian President Heinz Fischer is part of the alpine country’s delegation as well. He will attend economic forums later today. Fekter explained she would fly to Bern tomorrow to sign the taxation contract before heading for Vienna.

The Austrian SPÖ-ÖVP government coalition controversially decided to consider additional earnings from a bilateral tax agreement with Switzerland in its budget consolidation package. Chancellor Werner Faymann’s SPÖ and the ÖVP of Vice Chancellor Michael Spindelegger agreed about taking a possible one-billion-Euro windfall in 2013 into account. Tens of millions of Euros could be generated this way in the following years, according to the coalition’s savings and tax pact which was presented in February and passed in parliament last month.

The opposition harshly criticised the government coalition for its decision. The Alliance for the Future of Austria (BZÖ), the Freedom Party (FPÖ) and the Greens agreed that the package included too many open questions and uncertain predictions. All opposition factions deplored a lack of structural, substantial reforms. They claimed the government preferred presenting "fantasy figures" such as the expected revenues from a tax contract with neighbouring Switzerland. The opposition also said this decision was based on an "irresponsible gambling attitude".

Fekter revealed today that the money Austrians currently stashed away in Switzerland could be charged with a new tax making 15 to 40 per cent of the amounts individuals saved in the accounts. The contract with Switzerland guarantees Swiss banks’ Austrian customers’ anonymity based on the country’s tight bank secrecy – which tempts people from all over the world to open accounts in the rich non-European Union (EU) member state. Austrians are suspected of trying to hide up to 20 billion Euros from tax officials in their homeland in Switzerland, according to SPÖ-ÖVP coalition officials.

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