As the FT reports:
Brussels is threatening to sue Britain unless ministers significantly alter a landmark tax deal with Switzerland, in a dispute that will cast doubt over the £4bn to £7bn of expected proceeds for the Treasury.
European Commission lawyers concluded that the bilateral deal, which recovers billions of unpaid taxes in return for protecting the prized secrecy of the Swiss banking system, is in breach of European Union laws that are tougher on tax evasion.
What can I say except I and the Tax Justice Network told you so, often?
It really is time people like the Treasury listened to us more often. We've invariably been right.
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Where’s Darren?
We want to hear your opinion that the EU Commission would never dare intervene against the all powerful Germany… After all, you said the EU is reliant on Germany saving them all.
We await with baited breath.
Bated.
Unless you have a worm dangling from your nose, which would be baited.
!!
Merchant of Venice:
What should I say to you? Should I not say
‘Hath a dog money? is it possible
A cur can lend three thousand ducats?’ Or
Shall I bend low and in a bondman’s key,
With bated breath and whispering humbleness, Say this;
‘Fair sir, you spit on me on Wednesday last;
You spurn’d me such a day; another time
You call’d me dog; and for these courtesies
I’ll lend you thus much moneys’?
Geoffrey Taylor, Cruel, Clever Cat:
Sally, having swallowed cheese
Directs down holes the scented breeze
Enticing thus with baited breath
Nice mice to an untimely death.
The correct spelling is bated breath but it’s so common these days to see it written as baited breath that there’s every chance that it will soon become the usual form, to the disgust of conservative speakers and the confusion of dictionary writers. Examples in newspapers and magazines are legion.
It’s easy to mock, but there’s a real problem here. Bated and baited sound the same and we no longer use bated (let alone the verb to bate), outside this one set phrase, which has become an idiom. Confusion is almost inevitable. Bated here is a contraction of abated through loss of the unstressed first vowel (a process called aphesis); it means “reduced, lessened, lowered in force”. So bated breath refers to a state in which you almost stop breathing as a result of some strong emotion, such as terror or awe.
Shakespeare is the first writer known to use it, in The Merchant of Venice, in which Shylock says to Antonio: “Shall I bend low and, in a bondman’s key, / With bated breath and whisp’ring humbleness, / Say this …”. Nearly three centuries later, Mark Twain employed it in Tom Sawyer: “Every eye fixed itself upon him; with parted lips and bated breath the audience hung upon his words, taking no note of time, rapt in the ghastly fascinations of the tale”.
For those who know the older spelling or who stop to consider the matter, baited breath evokes an incongruous image; Geoffrey Taylor humorously (and consciously) captured it in verse in his poem Cruel Clever Cat:
Note that the EU “Threatens” to sue, I think you will find that this issue will be horse traded away as part of the general Eurozone problems. This deal will stand….
Don’t you believe it
Hey Richard (not Murphy).
Sure. This deal will stand.
EU commission doesn’t mind Rubik destroys the EU savings tax strategy that they have been working on for 15 years. EU Commission doesn’t mind that this is in direct conflict with their goal of automatic exchange. EU Commission doesn’t mind that Luxembourg can pin their veto of the EU savings tax amendments on Rubik. EU Commission doesn’t mind that Eu Member states can anytime do a bilateral agreement in conflict with EU legislation. Hell, why not. It’s a free for all society!
Got any more opinions on this matter? LoL
Mark
You write (ironically) that “[the] EU Commission doesn’t mind that this is in direct conflict with their goal of automatic exchange”.
There are two issues with this: one, automatic exchange may be the COMMISSION’s goal, but it is not the EU’s goal. EU-level tax matters are decided by ECOFIN, not the Commission, and Luxembourg (which categorically refuses to consider automatic exchange) has a veto over any ECOFIN decision. Second, and more topically, even if the EU Commission succeeds in convincing the UK to abandon the Swiss deals, this will do nothing to promote automatic exchange. Luxembourg and Austria will continue to veto any move in that direction at the level of ECOFIN.
What do you think is the Commission’s real agenda here? Power grabbing?
Richard (M)
have you read today’s (29/11) FT ? The editorial was strongly supporting your view of the Swiss tax deal.
You could probably also agree with every word of an article Philip Stephens wrote.
It really is a terrible day for the John Redwoods of this world when they can’t even say the FT agrees with them.
you are back in good form.
Â
Semeta is more combative than many had assumed. By all accounts he has been feeling extremely hurt at a personal level for being totally sidelined during the negotiation of the bilateral agreements. Some say he only found out about them by reading the press.
He also has the luxury of being an unelected politician and therefore completely unaccountable for any of his actions. That is dangerous enough, but more importantly, he is also totally out-of-his-depth.
This background explains why he seems intent on making irrational decisions.
There is an emerging consensus that this is not a battle he can win legally. All parties have taken extensive legal advice on the issue of the compatibility of the bilateral agreements and have gone to great length to ensure compliance. All legal experts except one (who like you is loosely associated to the tax “justice” movement and therefore not reliable for objectivity) agree that the Commission’s case is overall tenuous.
Although Semeta has not taken a formal position yet, his aides have argued that the agreements are in breach of EU law in 3 main areas.
First, the bilateral treaties undercut the terms of the 2004 EUSD and the equivalent agreement with Switzerland because, unlike the EUSD, the withholding tax fully discharges the taxpayer of all liabilities. This argument ignores the fact that the definition of discharge is governed by national tax codes. Even under the EUSD, Germany could unilaterally decide that it will not pursue taxpayers with Swiss interest income on which the withholding tax has been paid.
Second, Semeta seems to argue that the withholding rate in the German treaty (26.375%) undercuts the rate on the EU’s agreement with Switzerland (35%). This argument also ignores the fact that the 35% withholding tax under the EU-Swiss agreement is split between Switzerland and Germany, so that Germany’s net share is actually equal to a rate of 26.375%.
Third, Semeta seems to argue that the bilateral agreements undermine his mandate to negotiate the revision of the EUSD equivalent agreements with third-parties including Switzerland, and in particular his mandate to deliver automatic exchange. There is an element of truth about this from a political point of view, and the agreements seem to have further solidified Luxembourg’s and Austria’s positions on ECOFIN. But politics and law are different things, and from a legal perspective, the Commission does not have any mandate to enter any negotiation with Switzerland; Luxembourg and Austria have consistently threatened to veto it at ECOFIN. Semeta cannot argue in law that his mandate is undercut if he does not even have one.
Semeta’s motivations may also be political. Since Germany announced the agreement, a large number of other member states have expressed an urgent interest for a similar deal. The EU Commission is being marginalised and felt it had to act. The threat of lawsuits may only be a strategy to discourage those other member states.
But, there again, it does not look good for Semeta.
http://online.wsj.com/article/BT-CO-20111129-712910.html
Ouch.
Now that Darren is really clutching at straws
More like the claim of a desperate man
Or to put it another way – a libertarian who knows he’s lost
Gee Darren,
Only recently you said the EU Commission would never dare intervene against Germany as the EU Member states needed the fiscal revenue from these deals. Now you’re saying they haven’t got the legal right to intervene.
Next you’ll be saying its an abomination! LoL. Give up pal.
This Brussels based EU observer lawyer has a very reasoned opinion that the EU Commission has a strong case to legally intervene against UK / Germany.
What folks like Darren ignore, is that no EU member state can enter into a bilateral agreement for which an EU level directive already exists, even if say withholding rate of the bilateral agreement is the same as the directive or even if a Member State decides on its own “national tax codes”.
As Ross Perott once aptly said, this dog won’t hunt.
Darren,
Your assertion that ‘everyone agrees that the EU’s position is tenuous’ is factually inaccurate. Take a look at this, from World Radio Switzerland: one of the best-informed lawyers on this is Jean Russotto, a partner in the Brussels office of Steptoe & Johnson LLP. Here is what he said yesterday:
http://taxjustice.blogspot.com/2011/12/swiss-tax-deals-with-uk-germany-where.html
“its case sounds legally rather strong — there is no doubt about it.”
I guess your assertion is based on wishful thinking, and guessing.
Mark, Nick – I had listened to this interview before. It is well informed and overall well balanced. The interviewee does his best to avoid taking a position (I am a lawyer by training so I recognise the tricks of the trade). You can really draw any conclusion from what he says.
Let’s watch this space and see what comes out. You know my position and I know yours. I suspect neither of us will be fully right or wrong in the end. Despite what Mark says, the EU Commission cannot win this case. However, and the interviewee is absolutely right about this, it can become enough of a nuisance that Switzerland pulls out of the agreements. There is already considerable opposition to the deals in the Swiss legislatures and the EU intervention may well tip the scales.
Assuming for one second that Switzerland pulls the deals (even though this is not at all the baseline scenario), one interesting question is what happens next. Your lot is very focused on the EUSD revision as some sort of miracle cure, but you forget that it will neither deal with the legacy untaxed assets, nor will it deliver automatic exchange of information.