Saturday

20th Aug 2022

EU scraps bank secrecy to catch cross-border tax evaders

EU finance ministers on Tuesday (7 December) agreed to remove bank secrecy as a reason for blocking cross-border tax fraud investigations, in a bid to find fresh resources for cash-strapped state coffers.

"Tax evaders can no longer exploit bank secrecy as an excuse," EU taxation commissioner Algirdas Semeta said after the meeting.

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  • Cross-border tax fraud will no longer hide behind bank secrecy (Photo: Flickr)

He called the deal "a huge step forward in the fight against tax evasion and tax fraud in the EU" at a time when budgets are under huge pressure amid the widespread drive to bring down public deficits.

The agreement will introduce time limits for national tax authorities to answer requests for information on citizens or businesses and parameters for the "automatic" exchange of information.

Targeted is all "income from employment, directors' fees, dividends, capital gains, royalties, certain life insurance products, pensions, and ownership of and income from immovable property." The new rules will apply from 1 January next year, but they will not be retroactive.

The deal has been blocked for almost a year by Austria and Luxembourg, whose national systems still allow for banking secrecy. They still managed to limit the extent to which "automatic" exchange of tax information will be carried out, with only five categories of income and capital, rather than eight, as originally proposed by the European Commission, to be included in the new measures.

The remaining three may be added later, in 2017, when the EU executive is set to review the policy.

Vienna and Luxembourg also managed to get an obligation for the tax authorities to ask information on specific suspects, ruling out general searches for tax evaders.

Luxembourg's finance minister Luc Frieden was quoted by DPA as saying he obtained important concessions, especially the fact that "fishing expeditions are not permitted" and that the list did not include savings, meaning "banking data."

Mr Frieden said the deal leaves individuals "the possibility to manage their resources across frontiers, guarding their privacy while being cooperative in the fight against fiscal fraud."

Conditions met for German nuclear extension, officials say

Conditions have been met for the German government to allow a temporary lifetime extension of three remaining nuclear reactors, according to the Wall Street Journal, as the country is facing a likely shortage of gas this winter.

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