Switzerland, U.K. To Talk on Taxes

ZURICH—Switzerland and the U.K. Monday agreed to start negotiations on tax issues affecting the two countries, a Swiss official said.

Swiss Finance Minister Hans-Rudolph Merz, U.K. Chancellor of the Exchequer George Osborne and Exchequer Secretary to the Treasury David Gauke met early Monday in London before the agreement was signed, said Mario Tuor, spokesman for the Swiss State Secretariat for International Financial Matters.

The talks, set to begin at the start of 2011, are aimed at ensuring U.K. taxpayers pay taxes on the interest they earn from secret Swiss bank accounts, a person familiar with the situation said.

"The talks reaffirmed the willingness of both countries to further intensify cooperation in financial and tax matters and to strengthen long-term legal security for market participants," according to the SIF.

A similar declaration will be signed with German Finance Minister Wolfgang Schäuble on Oct. 28 in Bern, according to the Swiss authorities.

The negotiations will seek to expand cross-border cooperation between the two countries on tax issues, and improved market access for banks, and follow exploratory talks between Swiss and U.K. working groups in recent months.

The Swiss Bankers Association welcomed the agreement, and Chairman Patrick Odier said it represents an "important milestone in the bilateral relationship between the two countries."

The agreement will also "respect the protection of bank client privacy," SIF said.

The deals between Switzerland and the U.K. and Germany, which have been brokered by Swiss diplomat Michael Ambuehl, should help improve relationships between the countries.

"The agreement is fair and balanced, and U.K. clients of Swiss banks will get the opportunity to regularize their undeclared assets while maintaining their financial privacy," said Swiss Banking Association Chief Executive Claude-Alain Margelisch.