Friday

22nd Jun 2018

Austria, Luxembourg to play ball in tax clampdown

  • Some €1 trillion are lost yearly to tax evasion (Photo: bundesbank.de)

Germany expects Austria and Luxembourg to take part in an EU-wide effort to clamp down on tax evasion, even though the two countries last week blocked a key EU proposal on the topic.

An EU summit devoted to tax evasion on Wednesday (22 May) is not meant to "pressure" Austria and Luxembourg, but the German government expects the two countries to eventually back an initiative they blocked last week, a senior German official said Tuesday in Berlin.

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The official underlined the significance of the Austrian and Luxembourg finance ministers last week agreeing to give a mandate to the European Commission for savings tax deals with Switzerland, Andorra, Liechtenstein, Monaco and San Marino.

"If they agreed to automatic data exchanges between the EU and these five countries, it also implies they will participate in the automatic data exchange within the EU. Or else it would make no sense. So we see a pretty clear link here," the source said.

Meanwhile, in Brussels, EU officials also expressed their hope that the Wednesday summit will bring about "some movement" from the Austrian and Luxembourg delegations.

The mandate agreed last week was a "significant breakthrough", but EU states still need to "step up efforts in agreeing the EU savings tax directive," Irish foreign minister Eamon Gilmore said Tuesday in a press conference after chairing a preparatory meeting ahead of the summit.

EU administrative affairs commissioner Maros Sefcovic also said it was "very good" that ministers agreed on the mandate, "but the real test is whether we can deliver quick progress on the savings directive" blocked by Austria and Luxembourg.

With general elections due end of September, the two largest Austrian parties that form the ruling coalition - the Social-Democrats of Prime Minister Werner Faymann and the Conservatives of finance minister Maria Fekter - are at odds on whether to support the scheme or not.

Luxembourg, meanwhile, has said it will participate in the automatic exchange from 2015 on, although last week it backed the Austrian stance.

On Tuesday, Luxembourg repeated its position to the US, promising it will share information about bank accounts held by US citizens and residents from 2015 on.

"Luxembourg wishes to see the same conditions apply to all competing financial centres and to see the automatic exchange of information accepted as the international standard," a statement of the Luxembourg finance ministry said.

A large trove of offshore accounts leaked to several international newspapers has stepped up pressure on governments to clamp down on tax havens and go after unpaid taxes. Estimates put the lost tax revenues at €1 trillion yearly.

Analysis

Why is Austria so keen on bank secrecy?

Privacy concerns and the fear of losing big money from abroad are the main reasons why Austria is still holding out against an EU scheme to lift bank secrecy in Europe.

Greece and creditors proclaim 'end of crisis'

After late-night talks, the Eurogroup agreed on a €15bn disbursement and debt relief measures for Greece, while setting out a tight monitoring when the bailout ends in August.

Opinion

The risks behind the 'green bond' boom

The EU should not overuse the financial system in order to achieve environmental goals, or it risks the emergence of a green bond bubble which would be detrimental to the financial sector and hinder the achievement of climate targets.

Opinion

Eurozone needs institutional reform

Both the examples of Greece and Italy test the limits of a system with inherent weaknesses that feeds internal gaps, strengthens deficits and debts in the European South, and surpluses in the European North respectively.

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