Thursday

26th May 2022

Luxembourg says No to new EU tax law

Luxembourg, one of the EU's smallest but richest countries, has said No to a new law against tax evasion.

Its finance minister, Luc Frieden, told press in Brussels on Monday (13 May): "We won't agree tomorrow to the savings tax directive with an extended use because there's still some need for clarification."

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

He added: "At the moment we lack precision about a number of questions that need answers … We don't know how this will be written into European law and we're not sure that all the loopholes have been closed, in particular a number of trusts don't seem to be covered."

The European Commission has been trying to update its anti-tax-fraud legislation for the past eight years.

Its 2005 law forces member states to automatically exchange information on EU nationals' deposits in other European Union countries.

But it contains gaps on income received via investment funds, pensions, trusts and foundations.

It also contains a big hole on Austria and Luxembourg.

The two financial centres are exempt from automatic exchange until such time as five non-EU tax havens - Andorra, Liechtenstein, Monaco, San Marino and Switzerland - agree to it as well.

Luxembourg's reluctance to go ahead puts it on a collision course with major EU states, including France, Germany and the UK.

Their finance ministers will bash heads with Frieden at a meeting in Brussels on Tuesday.

EU leaders will also tackle the subject at a summit on 22 May.

"It is a test of our seriousness and the world is watching us," British finance chief George Osborne said in a letter to his EU counterparts ahead of Tuesday's talks, the Financial Times reports.

"If agreement on automatic data exchange is not reached at Ecofin [the EU finance ministers' meeting] on 14 May, it will be achieved a week later at the meeting of heads of government," Austrian Chancellor Werner Faymann told the Kronen Zeitung newspaper on Sunday.

Frieden's statement also appears to clash with Luxembourg's earlier commitment to end bank secrecy by 2015.

But he did agree to let the commission launch talks with the group-of-five non-EU tax havens on farming out the automatic data exchange rule.

"We can agree to the [negotiating] mandate now, and we couldn't in the past, because the mandate has been changed," he said, noting that the new text includes an EU commitment to push for tax transparency among the G20 group of leading world economies.

The commission estimates that crisis-hit EU treasuries could harvest up to €1 trillion in extra tax income if the new law is put in place.

Luxembourg, home to just half a million people, has a GDP per capita which is almost three times the size of the EU average.

Its wealth comes mainly from financial services.

Its banking sector is worth 22 times the size of its economy.

EU targets tax evasion on savings

The EU commission wants to tighten tax loopholes for EU citizens who hold accounts in member states and in Switzerland, Andorra, San Marino, Monaco and Lichtenstein.

EU seeks quick deal on tax transparency

The EU is hoping to reach agreement on automatic exchange of data on overseas bank accounts, according to a letter sent to national capitals on Wednesday

EU Commission extends borrowing curbs in 2023

The European Commission on Monday proposed to extend suspension of fiscal borrowing rule in 2023 — but advised prudence amid already rising real interest rates.

Commission grilled on RePowerEU €210bn pricetag

EU leaders unveiled a €210bn strategy aiming to cut Russian gas out of the European energy equation before 2027 and by two-thirds before the end of the year — but questions remain on how it is to be financed.

News in Brief

  1. Dutch journalists sue EU over banned Russia TV channels
  2. EU holding €23bn of Russian bank reserves
  3. Russia speeds up passport process in occupied Ukraine
  4. Palestinian civil society denounce Metsola's Israel visit
  5. Johnson refuses to resign after Downing Street parties report
  6. EU border police has over 2,000 agents deployed
  7. Dutch tax authorities to admit to institutional racism
  8. Rutte calls for EU pension and labour reforms

Stakeholders' Highlights

  1. Nordic Council of MinistersNordic delegation visits Nordic Bridges in Canada
  2. Nordic Council of MinistersClear to proceed - green shipping corridors in the Nordic Region
  3. Nordic Council of MinistersNordic ministers agree on international climate commitments
  4. UNESDA - SOFT DRINKS EUROPEEfficient waste collection schemes, closed-loop recycling and access to recycled content are crucial to transition to a circular economy in Europe
  5. UiPathNo digital future for the EU without Intelligent Automation? Online briefing Link

Latest News

  1. EU summit will be 'unwavering' on arms for Ukraine
  2. Orbán's new state of emergency under fire
  3. EU parliament prevaricates on barring Russian lobbyists
  4. Ukraine lawyer enlists EU watchdog against Russian oil
  5. Right of Reply: Hungarian government
  6. When Reagan met Gorbachev — a history lesson for Putin
  7. Orbán oil veto to deface EU summit on Ukraine
  8. France aims for EU minimum-tax deal in June

Join EUobserver

Support quality EU news

Join us