Proposal for a Council Decision on the signature of the Agreement in the form of an exchange of letters between the European Community and the Swiss Confederation on the date of application of the Agreement between the European Community and the Swiss Confederation providing for measures equivalent to those laid down in Council Directive 2003/48/EC of 3 June 2003 on taxation of savings income in the form of interest payments
Date: 2004-10-11
Institutions: European Commission
Subjects: Switzerland, agreement (EU), signature of an agreement, tax convention, tax on investment income

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 11.10.2004 
COM(2004)669 final 

Proposal for a 

COUNCIL DECISION 

on the signature of the Agreement in the form of an exchange of letters between the 
European Community and the Swiss Confederation on the date of application of the 
Agreement between the European Community and the Swiss Confederation providing 
for measures equivalent to those laid down in Council Directive 2003/48/EC of 3 June 
2003 on taxation of savings income in the form of interest payments 

(presented by the Commission) 

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EXPLANATORY MEMORANDUM 

On  2  June  2004,  the  Council  adopted  a  Decision  on  the  signing  and  conclusion  of  the 
Agreement  between  the  European  Community  and  the  Swiss  Confederation  providing  for 
measures  equivalent  to  those  laid  down  in  Council  Directive  2003/48/EC  on  taxation  of 
savings income in the form of interest payments1.  

Pursuant to Article 17(2) of the Agreement, the parties must effectively implement and apply 
it by 1 January 2005. However, Article 18(1) provides that the application of the Agreement 
will  be  conditional  on  the  adoption  and  implementation  by  the  dependent  or  associated 
territories  of  the  Member  States  mentioned  in  the  report  of  the  Council  (Economic  and 
Financial  Questions)  to  the  European  Council  of  Santa  Maria  da  Feira  of  19  and  20  June 
2000, as well as by the United States of America, Andorra, Liechtenstein, Monaco and San 
Marino respectively of measures which conform with or are equivalent to those contained in 
the  Directive  or  the  Agreement,  with  the  exception  of  article  15  of  the  Agreement,  and 
providing for the same dates of implementation. 

Article 18 (2) provides that the Contracting Parties shall decide, by common accord, at least 
six months before the date referred to in Article 17(2) (1 January 2005), whether the condition 
set out in paragraph 1 will be met having regard to the dates of entry into force of the relevant 
measures in the third States and dependent or associated territories concerned. Article 18 (2) 
of the Agreement also provides that if the Contracting Parties do not decide that the condition 
will be met, they shall, by common accord, adopt a new date for the purposes of Article 17(2).  

The  Contracting  Parties  did  not,  prior  to  30  June  2004,  decide  that  the  condition  in  Article 
18(1) would be met. In the negotiations between the Community and Switzerland, it became 
clear  that  Switzerland  will  not  be  in  the  position  to  apply  the  measures  provided  for  in  the 
Agreement from 1 January 2005. Nor will it be possible for all the third countries concerned 
to implement and apply their respective agreements effectively before that date. Subject to the 
fulfilment of its constitutional requirements, Switzerland will, however, be able to apply these 
measures from 1 July 2005. The Swiss Government will do its utmost to ensure that the date 
of 1 July 2005 will be respected. 

In  view  of  the  foregoing,  the  Council  noted  that  the  condition  set  out  in  Article  17  (2)  of 
Council Directive 2003/48/EC2 will not be met with respect to Switzerland in relation to the 
date  of  application  of  1  January  2005  and  invited  the  Commission  to  present  a  proposal 
providing for 1 July 2005 as the new date of application of the Directive. On 25 June 2004, 
the Commission adopted a proposal for a Council Decision on the date of application of the 
Directive3. This proposal was adopted by the Council on 19 July 2004.4 

It  is  necessary  to  also  reflect  this  new  date  of  application  in  the  Agreement  between  the 
Community  and  Switzerland.  In  accordance  with  Article  18  (2)  of  the  Agreement,  a  draft 
exchange  of  letters  was  initialled  on  25  June  2004,  expressing  the  agreement  of  the 
Contracting Parties to adopt the date of 1 July 2005 as the new date for the purposes of Article 
17 (2) of the Agreement. It may be noted that Switzerland is obliged to apply the provisions 

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4 

OJ L , .2004, p 
OJ L 157, 26.6.2003, p.38 
OJ C , .2004, p 
OJ L 257, 4.8.2004, p. 7 

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of the Agreement as from 1 July 2005 only if all Member States and each of the countries and 
territories  mentioned  in  Article  18  (1)  of  the  Agreement  apply  the  savings  tax  measures 
mentioned  therein  from  that  same  date.  The  same  condition  also  applies  for  each  Member 
State.  

The proposal for a Council Decision provides for the signature of this exchange of letters.  

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Proposal for a 

COUNCIL DECISION 

on the signature of the Agreement in the form of an exchange of letters between the 
European Community and the Swiss Confederation on the date of application of the 
Agreement between the European Community and the Swiss Confederation providing 
for measures equivalent to those laid down in Council Directive 2003/48/EC of 3 June 
2003 on taxation of savings income in the form of interest payments 

THE COUNCIL OF THE EUROPEAN UNION, 

Having regard to the Treaty establishing the European Community, and in particular Article 
94 in conjunction with Article 300 (2), first subparagraph, thereof, 

Having regard to the proposal from the Commission5, 

Whereas: 

(1) 

(2) 

(3) 

Article  17  (2)  of  the  Agreement  between  the  European  Community  and  the  Swiss 
Confederation  providing  for  measures  equivalent  to  those  laid  down  in  Council 
Directive 2003/48/EC on taxation of savings income in the form of interest payments 
provides  that,  subject  to  the  conditions  set  out  therein,  Switzerland  and  where 
applicable the Community shall effectively implement and apply this Agreement from 
1 January 2005.  

However, pursuant to Article 18(1), the application of the Agreement is conditional on 
the adoption and implementation by certain dependent or associated territories of the 
Member States and by the United States of America, Andorra, Liechtenstein, Monaco 
and  San  Marino  respectively  of  measures  which  conform  with  or  are  equivalent  to 
those  contained  in  the  Directive  or  the  Agreement.  Under  Article  18(2),  if  the 
Contracting Parties do not, at least six months prior to 1 January 2005, decide that the 
condition  will  be  met,  they  shall,  by  common  accord,  adopt  a  new  date  for  the 
purposes of Article 17(2). 

The  Contracting  Parties  made  no  such  decision  six  months  prior  to  1  January  2005. 
Not  all  the  third  countries  in  question  will  be  in  a  position  to  implement  their 
respective Agreements by that date. Moreover, it will only be possible for Switzerland 
to  implement  and  apply  this  Agreement  from  1  July  2005  and  this  on  the  condition 
that Swiss constitutional requirements will be met by that date. It appears that each of 
the third countries and dependent or associated territories referred to in Article 18 (1) 
of the Agreement will also be able to meet the conditions set out in that paragraph by 1 
July 2005.  

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OJ C , .2004, p 

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(4) 

(5) 

In  accordance  with  Article  18  (2)  of  the  Agreement,  the  date  of  1  July  2005  should 
therefore  be  adopted  as  the  new  date  for  the  purposes  of  Article  17  (2)  of  the 
Agreement.  

It is desirable to sign the Agreement in the form of an exchange of letters which was 
initialled on 25 June 2004. 

HAS DECIDED AS FOLLOWS:  

Article 1 

The President of the Council is hereby authorised to designate the persons empowered to sign 
on behalf of the Community the Agreement in the form of an exchange of letters between the 
European  Community  and  the  Swiss  Confederation  on  the  date  of  application  of  the 
Agreement  between  the  European  Community  and  the  Swiss  Confederation  providing  for 
measures equivalent to those laid down in Council Directive 2003/48/EC of 3 June 2003 on 
taxation of savings income in the form of interest payments. 

The text of the Agreement is attached to this Decision. 

Article 2 

This Decision shall be published in the Official Journal of the European Union. 

Done at Brussels,  

For the Council 
The President 

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ANNEX  

Agreement in the form of an exchange of letters between the European Community and the 
Swiss Confederation on the date of application of the Agreement between the European 
Community and the Swiss Confederation providing for measures equivalent to those laid 
down in Council Directive 2003/48/EC of 3 June 2003 on taxation of savings income in the 
form of interest payments 

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A. Letter of the European Community 

Sir, 

I have the honour to refer to the Agreement between the European Community and the Swiss 
Confederation  providing  for  measures  equivalent  to  those  laid  down  in  Council  Directive 
2003/48/EC on taxation of savings income in the form of interest payments. The Agreement, 
which  will  be  ratified  or  approved  by  the  Contracting  Parties  in  accordance  with  their  own 
procedures, will be applied from a date determined in accordance with the procedure set out 
in Article 18 (2) of the Agreement.  

Article 18(2) provides that the Contracting Parties shall decide by common accord at least six 
months before the date referred to in Article 17(2) of the Agreement (1 January 2005) whether 
the condition set out in article 18(1) of the Agreement will be met and if they do not decide 
that the condition will be met shall adopt, by common accord, a new date for application of 
the Agreement. 

Article  18(1)  provides  that  the  application  of  the  Agreement  will  be  conditional  on  the 
adoption and implementation by the dependent or associated territories of the Member States 
mentioned in the report of the Council (Economic and Financial Questions) to the European 
Council of Santa Maria da Feira of 19 and 20 June 2000, as well as by the United States of 
America,  Andorra,  Liechtenstein,  Monaco  and  San  Marino  respectively  of  measures  which 
conform with or are equivalent to those contained in the Directive or the Agreement, with the 
exception of article 15 of the Agreement, and providing for the same dates of implementation. 

On the basis of the negotiations that have taken place between the European Community and 
the  Swiss  Confederation  I  understand  that  it  will  in  accordance  with  Article  17  (2)  of  the 
Agreement only be possible for the Swiss Confederation to apply the Agreement from 1 July 
2005 and this on the understanding that Swiss constitutional requirements will be met by that 
date. 

I request your confirmation that the date of 1 July 2005 is acceptable to you as the new date 
for application of the Agreement as provided for in Article 18(2) of the Agreement and that 
the  Swiss  Government  will  do  its  utmost  to  ensure  that  this  date  will  be  respected.  I  also 
request you to confirm that on the basis of the information provided in the negotiations held 
on 21 June 2004, and without prejudice to the next paragraph the Swiss Confederation accepts 
that the conditions of Article 18(1) will be met. 

I accept that Switzerland is obliged to apply the provisions of the Agreement as from 1 July 
2005  only  if  all  EU  Member  States  and  each  of  the  countries  and  territories  mentioned  in 
Article 18 (1) of the Agreement apply the savings tax measures mentioned therein from that 
same date. The same condition shall also apply for each EU Member State. 

Please accept, Sir, the assurance of our highest consideration,  

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B. Letter of the Swiss Confederation 

Sir,  

I have the honour to acknowledge receipt of your letter of ….., which reads as follows: 

'Sir, 

I have the honour to refer to the Agreement between the European Community and the Swiss 
Confederation  providing  for  measures  equivalent  to  those  laid  down  in  Council  Directive 
2003/48/EC on taxation of savings income in the form of interest payments. The Agreement, 
which  will  be  ratified  or  approved  by  the  Contracting  Parties  in  accordance  with  their  own 
procedures, will be applied from a date determined in accordance with the procedure set out 
in Article 18 (2) of the Agreement.  

Article 18(2) provides that the Contracting Parties shall decide by common accord at least six 
months before the date referred to in Article 17(2) of the Agreement (1 January 2005) whether 
the condition set out in article 18(1) of the Agreement will be met and if they do not decide 
that the condition will be met shall adopt, by common accord, a new date for application of 
the Agreement. 

Article  18(1)  provides  that  the  application  of  the  Agreement  will  be  conditional  on  the 
adoption and implementation by the dependent or associated territories of the Member States 
mentioned in the report of the Council (Economic and Financial Questions) to the European 
Council of Santa Maria da Feira of 19 and 20 June 2000, as well as by the United States of 
America,  Andorra,  Liechtenstein,  Monaco  and  San  Marino  respectively  of  measures  which 
conform with or are equivalent to those contained in the Directive or the Agreement, with the 
exception of article 15 of the Agreement, and providing for the same dates of implementation. 

On the basis of the negotiations that have taken place between the European Community and 
the  Swiss  Confederation  I  understand  that  it  will  in  accordance  with  Article  17  (2)  of  the 
Agreement only be possible for the Swiss Confederation to apply the Agreement from 1 July 
2005 and this on the understanding that Swiss constitutional requirements will be met by that 
date. 

I request your confirmation that the date of 1 July 2005 is acceptable to you as the new date 
for application of the Agreement as provided for in Article 18(2) of the Agreement and that 
the  Swiss  Government  will  do  its  utmost  to  ensure  that  this  date  will  be  respected.  I  also 
request you to confirm that on the basis of the information provided in the negotiations held 
on 21 June 2004, and without prejudice to the next paragraph the Swiss Confederation accepts 
that the conditions of Article 18(1) will be met. 

I accept that Switzerland is obliged to apply the provisions of the Agreement as from 1 July 
2005  only  if  all  EU  Member  States  and  each  of  the  countries  and  territories  mentioned  in 
Article 18 (1) of the Agreement apply the savings tax measures mentioned therein from that 
same date. The same condition shall also apply for each EU Member State. 

Please accept, Sir, the assurance of our highest consideration,' 

On the basis of the negotiations that have taken place between the European Community and 
the Swiss Confederation I am able to confirm the agreement of the Swiss Confederation to a 

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new date of application of the aforementioned Agreement of 1 July 2005 on the condition that 
Swiss  constitutional  requirements  will  be  met  by  that  date.  I  confirm  that  the  Swiss 
Government will do its utmost to ensure that this date will be respected. 

I confirm that subject to technical verification by my services of the information provided in 
the  negotiations  held  on  21  June  2004,  which  will  be  confirmed  by  me  in  advance  of  the 
signing of the Agreement on the basis of finalised versions of the appropriate agreements, the 
Swiss Confederation accepts that the conditions of Article 18(1) will be met without prejudice 
to the point made in the following paragraph. 

I agree that Switzerland is obliged to apply the provisions of the Agreement as from 1 July 
2005 only if all EU-Member States and each of the countries and territories mentioned in Art. 
18  (1)  of  the  Agreement  apply  the  savings  tax  measures  mentioned  therein  from  that  same 
date. I accept that the same condition shall also apply for each EU Member State.  

Please accept, Sir, the assurance of our highest consideration, 

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