Thursday

22nd Jun 2017

Top five EU states push for tax transparency

  • Austria and Luxembourg have been opposed to loosening rules on bank secrecy (Photo: Images_of_Money)

France, Germany, Italy, Spain and the UK have agreed to more automatic exchanges of banking data to fight tax evasion, increasing pressure on Austria and Luxembourg to give up their veto on the equivalent EU bill.

In a joint letter to the EU commission sent on Tuesday (9 April), the finance ministers of the five largest EU countries say they have agreed on a "pilot" project of "automatic information exchange" aimed at fighting tax evasion.

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The initiative is open to other member states and is based on a recently adopted law in the US - the Foreign Account Tax Compliance Act - that requires US citizens to declare their bank accounts held abroad and foreign banks to notify US tax authorities about their American clients.

A similar EU-wide law has so far been held up by Austria and Luxembourg, both keen on preserving bank secrecy for domestic and foreign clients.

The five finance ministers "call on all EU member states to agree without delay" on the bill, so that "Europe can take a lead in promoting a global system of automatic information exchange, removing the hiding places for those who would seek to evade paying their taxes."

The collapse of the Cyprus banking system - which like Luxembourg's was much larger than the country's GDP - and a series of revelations about the offshore banking model have increased pressure on Austria and Luxembourg to change their position.

Luxembourg has already signalled "openness" to discuss bank secrecy. And on Tuesday, Austrian Chancellor Werner Faymann told the Kleine Zeitung his country was "ready for talks on a more intensive exchange of information on international investors."

But added that bank secrecy will remain in place for domestic customers and said it would be "absurd" for an Austrian grandmother to have to show her savings accounts to the Austrian finance minister.

The comments came after a spokesman for EU tax commissioner Algirdas Semeta said it was "unacceptable" that Austria was refusing to reform its banking secrecy laws.

Semeta also welcomed the initiative of EU's five largest countries and said in a statement this it may "speed up" the EU efforts. "

"Transparency is the key when it comes to fighting tax evasion and the global environment today leaves little room for those who resist it," Semeta said.

Luxembourg may loosen bank secrecy

Luxembourg may consider opening up its massive banking sector to greater scrutiny following concerns people are stashing away wealth from foreign tax inspectors.

French leader promises anti-tax-cheat crusade

French leader Hollande has promised to "eradicate" tax havens in the EU and in the wider world, after his approval rating fell to 26 percent following a tax scandal.

Austria attacks UK, as EU finance talks get ugly

Austria has accused the UK of being a haven for money launderers ahead of an EU meeting in Dublin, with Cyprus, Ireland, Portugal and Slovenia's (potential) bailout needs also on the agenda.

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At a summit in Brussels, EU and Chinese leaders will attempt to deepen ties on trade and climate as US president Trump plans to pull out of the Paris climate deal.

Italy reaches EU deal on failing bank

After months of negotiations, the European Commission and Italy agreed on the terms of rescue for Monte dei Paschi di Siena bank, including job cuts, salary caps and private sector involvement in the bailout.

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