EU FINANCE ministers have agreed to speed up a review of European savings tax rules to crack down on tax havens that are costing the Union members billions of euro every year.
Under pressure from Germany, which said last week that hundreds of its citizens had illegally invested €4 billion in Liechtenstein to avoid tax, ministers decided yesterday to bring forward a report on the rules by several months to May or June.
EU tax commissioner Laszlo Kovacs said the review would investigate how to extend existing banking transparency rules to cover more foreign states. It could also make banks provide information on foreign customers that hold bonds and equities, he said.
German finance minister Peer Steinbrueck said he was "pleasantly surprised" by support for amending the rules around the table. "A very beneficial discussion has commenced. Everybody knows it is a thick board that has to be drilled, but the current public debate about tax evasion has speeded things up," he said.
Under the 2005 savings tax directive, EU member states agreed to supply each other with information on deposits held by citizens of other member states in banks on their territory. The rules are intended to prevent EU citizens evading tax in their own countries by opening deposits in overseas bank accounts.
The Union also sought to extend them to well-known tax havens in Europe such as Liechtenstein, Switzerland, Andorra, the Isle of Man, Jersey and Monaco. However, these jurisdictions - along with Austria, Belgium and Luxembourg - managed to agree transitional arrangements whereby they would not supply customer details to revenue commissioners in EU states, but would instead collect taxes on the interest made on non-resident deposits and provide a portion of this money to the citizens' home state.
By paying this "withholding tax" to member states rather than supplying information on depositors to a non-resident's own revenue authorities, tax havens claim they are able to maintain the principles of banking secrecy. But the recent scandal in Liechtenstein, which revealed that 750 Germans had opened accounts to avoid paying taxes, has ratcheted up the pressure.
But the prospects of ministers agreeing a quick change to the savings tax rules when the report comes up for discussion in May or June are not good. Any change to tax legislation must be made by unanimity at the council of ministers and Austria and Luxembourg both signalled they opposed any knee jerk changes yesterday.
