Sunday

17th Feb 2019

Tax havens give EU commissioner the runaround

  • Capitals and lobbyists who want to harm the directive will target articles 2(3), 2(4), 4(2), most of article 6, and articles 10(2), 10(3) and 13(1) (Photo: Burning Robot Factory)

The EU commissioner trying to stop tax cheats from hiding money in Switzerland is puzzled why Austria and Luxembourg are standing in his way.

Algirdas Semeta told EUobserver that bank secrecy makes it impossible to say how much potential tax income is being lost even as EU countries cut wages and public services amid the financial crisis. But it is likely to be big bucks: Switzerland currently hands over €330 million a year in tax payments to EU countries, while its banks manage €1.5 trillion of private wealth.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

If it goes through, Semeta's bill - the so-called "amended savings tax directive" - would dynamite the status quo.

It would expand the definition of "interest" payments, making it hard to hide behind complex financial products. It would bring in a "paying agent upon receipt" rule, obliging trust funds and other shady structures to say who really owns what. And it would lead to "automatic" exchange of information on how much people have stashed away in Switzerland, as well as Andorra, Liechtenstein and San Marino.

So far, Austria and Luxembourg have stopped the Danish EU presidency from holding talks on the law.

They declined to tell EUobserver why. They tell Semeta it is because other EU countries - including Germany, Greece and the UK - are working on bilateral tax deals with Switzerland which are softer than the EU bill and which would make Swiss banks "more competitive" than Austrian and Luxembourgish ones in terms of hiding loot.

Semeta says Germany and the UK have promised him to change the bilateral pacts in order to tackle the problem.

He believes the real reason is linked to "the long history and traditions of banking secrecy" in Austria and Luxembourg.

"Taking into account the current economic situation it is very timely to find an additional source of revenue ... For instance, there are significant amounts of [Greek] savings which are put in Swiss banks and Greece deserves to collect those taxes. Sometimes, I do not understand why we were unable to reach this agreement already at the beginning of the crisis," he said.

Meanwhile, it remains to be seen if Germany and the UK will live up to their word.

Their finance ministries declined to give details of what they are actually changing in their Swiss pacts. Martin Kotthaus, a German spokesman, said only that it concerns "a rather technical provision" - a comment which does not sound like the large-scale "carving out" of softeners spoken of by Semeta.

Germany has also asked the Danish EU presidency not to start talks on Semeta's bill just yet.

It says the German parliament should first ratify the tweaked version of its Swiss deal in order to give confidence to Austria and Luxembourg - a continuation of the merry-go-round in which EU countries blame each other for delays.

When Denmark in July hands over the EU chairmanship to Cyprus, the dossier will fall into the lap of a country which is itself a tax haven, as well as a favoured destination for money launderers.

'Trust me, I'm Swiss'

For its part, Switzerland - which will also have to get on board if Semeta's law is to have any meaning and which risks losing business to the Bahamas, Hong Kong and Singapore - is not making encouraging noises.

Mario Tour, a spokesman for the Swiss finance ministry, told this website: "We do not want to have undeclared or criminal money in Switzerland."

But when asked why it drew up the loophole-riddled bilateral pacts with Germany and the UK in the first place, he said: "We think they're quite an effective way to tax outside income." When asked what he thinks about automatic exchange of information, he answered: "It gives you so much data that it is difficult to handle. With such an amount of data, it's difficult to find people who don't pay their taxes ... We want to deliver tax money, not data."

He acknowledged that people do not believe him when he says Switzerland will expose cheats by itself.

"That's one of our difficulties - to prove that we really mean it. People say: 'The Swiss have always been cheats, so this is just a drive to hide money.' Maybe it's understandable. But we will put [our promises] into force," the spokesman said.

France threatens Switzerland on tax evasion

French leader Nicolas Sarkozy has promised to make Switzerland into an international pariah unless it stops helping EU tax payers hide money. But EU countries have a poor track record of cracking down on high-level cheats.

News in Brief

  1. Spain's Sanchez calls snap election on 28 April
  2. 15,000 Belgian school kids march against climate change
  3. May suffers fresh Brexit defeat in parliament
  4. Warning for British banks over Brexit staff relocation
  5. Former Italian PM wants Merkel for top EU post
  6. Antisemitic incidents up 10% in Germany
  7. Italy's asylum rejection rate at record high
  8. Hungary will not claim EU funds for fraudulent project

Opinion

Eastern Europe Matters

The foreign ministers of Sweden, Poland and the Czech Republic reflect on 10 years of the Eastern Partnership with Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine.

Stakeholders' Highlights

  1. Counter BalanceEU bank urged to free itself from fossil fuels and take climate leadership
  2. Intercultural Dialogue PlatformRoundtable: Muslim Heresy and the Politics of Human Rights, Dr. Matthew J. Nelson
  3. Platform for Peace and JusticeTurkey suffering from the lack of the rule of law
  4. UNESDASoft Drinks Europe welcomes Tim Brett as its new president
  5. Nordic Council of MinistersNordic ministers take the lead in combatting climate change
  6. Counter BalanceEuropean Parliament takes incoherent steps on climate in future EU investments
  7. International Partnership For Human RightsKyrgyz authorities have to immediately release human rights defender Azimjon Askarov
  8. Nordic Council of MinistersSeminar on disability and user involvement
  9. Nordic Council of MinistersInternational appetite for Nordic food policies
  10. Nordic Council of MinistersNew Nordic Innovation House in Hong Kong
  11. Nordic Council of MinistersNordic Region has chance to become world leader when it comes to start-ups
  12. Nordic Council of MinistersTheresa May: “We will not be turning our backs on the Nordic region”

Latest News

  1. Sluggish procedure against Hungary back on table
  2. Could Finnish presidency fix labour-chain abuse?
  3. Brexit and trip to Egypt for Arab League This WEEK
  4. Belgian spy scandal puts EU and Nato at risk
  5. EU Parliament demands Saudi lobby transparency
  6. Saudi Arabia, but not Russia, on EU 'dirty money' list
  7. EU agrees draft copyright reform, riling tech giants
  8. Rutte warns EU to embrace 'Realpolitik' foreign policy

Stakeholders' Highlights

  1. International Partnership for Human RightsOpen letter to Emmanuel Macron ahead of Uzbek president's visit
  2. International Partnership for Human RightsRaising key human rights concerns during visit of Turkmenistan's foreign minister
  3. Nordic Council of MinistersState of the Nordic Region presented in Brussels
  4. Nordic Council of MinistersThe vital bioeconomy. New issue of “Sustainable Growth the Nordic Way” out now
  5. Nordic Council of MinistersThe Nordic gender effect goes international
  6. Nordic Council of MinistersPaula Lehtomaki from Finland elected as the Council's first female Secretary General
  7. Nordic Council of MinistersNordic design sets the stage at COP24, running a competition for sustainable chairs
  8. Counter BalanceIn Kenya, a motorway funded by the European Investment Bank runs over roadside dwellers
  9. ACCACompany Law Package: Making the Best of Digital and Cross Border Mobility,
  10. International Partnership for Human RightsCivil Society Worried About Shortcomings in EU-Kyrgyzstan Human Rights Dialogue
  11. UNESDAThe European Soft Drinks Industry Supports over 1.7 Million Jobs
  12. Mission of China to the EUJointly Building Belt and Road Initiative Leads to a Better Future for All

Join EUobserver

Support quality EU news

Join us