Austria, Luxembourg Block EU Savings Tax Proposals

By ExpatBriefing.com Editorial 18 May, 2012

Much to the deep annoyance and extreme frustration of European Union Tax Commissioner Algirdas Semeta, Austria and Luxembourg have blocked the European Commission’s plans to negotiate new and stronger savings tax agreements with Switzerland, Monaco, Liechtenstein, Andorra and San Marino, aimed at strengthening cooperation in tax matters.

During the recent European Union Economic and Financial Affairs Council (Ecofin) meeting in Brussels, the European Commission had sought a negotiating mandate from European Union (EU) finance ministers to strengthen common instruments against tax evasion by concluding a treaty with third countries providing for the application of the EU Savings Tax Directive in these jurisdictions.

In application since 2005, the EU Savings Tax Directive regulates the automatic exchange of information on the savings income of EU citizens, and is considered to be a key instrument in the fight against tax evasion. Given that the Directive contained a number of ‘loopholes’, the European Commission presented a revised version last year.

Yet Luxembourg and Austria have rejected the Commission’s latest plans. Austria’s Finance Minister Maria Fekter challenged the European Commission’s motives, insisting that it is merely endeavouring to abolish banking secrecy and to ensure an automatic exchange of data, rather than to include third states.

Outraged at the stance of Vienna and Luxembourg, European Tax Commissioner Semeta said:

“I am extremely frustrated that we could not reach agreement today on the mandates to negotiate new and stronger savings tax agreements with Switzerland and the four other third countries.”

“These mandates would give us a chance to strengthen our common instruments against tax evasion. They would open the possibility for new sources of revenue for member states. Revenues which they are legitimately due. And revenues which they badly need.”

Semeta explained:

“Tackling tax evasion is a growth-friendly way of boosting national budgets. How can any member state justify blocking progress in this area?”

The Commissioner warned: “The position that Austria and Luxembourg have taken on this issue is grossly unfair. They are hindering twenty-five willing member states from improving tax compliance and finding additional sources of income.”

He added: “We are only seeking mandates to negotiate at this stage – to explore how much we can achieve with Switzerland and the other countries. Any eventual agreement would have to be adopted unanimously. Austria and Luxembourg have every assurance that nothing will be signed without their full consent. So their resistance against merely opening negotiations is completely unjustifiable.”

Semeta ended: “I leave it to them to explain to citizens across Europe why they can support tax hikes and spending cuts for ordinary people, but won't allow us to step up our fight against tax evaders.”

EU ministers did, however, endorse in Brussels the new value-added tax (VAT) strategy put forward last December, designed to make the EU VAT regime simpler, more efficient and more fraud-proof, and including plans to re-examine reduced VAT rates, and to create new anti-fraud tools for example. The Commission is currently drafting concrete proposals.

A comprehensive report in our Intelligence Report series, examining in depth the situation of offshore transparency and secrecy in a number of the most prominent jurisdictions, is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report2.asp

Tags: Expatriates | Compliance | Tax | Offshore Confidentiality | European Commission | Value Added Tax (VAT) | Law | Banking | Financial Services | Liechtenstein | Luxembourg | Monaco | Offshore | Agreements | Offshore Banking | Banking Secrecy | Withholding Tax | Austria | Switzerland | European Union (EU) | Andorra | San Marino | Services | Europe |

 





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