Brussels, 22/03/2011 (Agence Europe) - No progress was made on the draft review of the EU savings tax directive at the meeting of high-ranking Council of Ministers' experts on 18 March 2011. The main opposition to a compromise deal drawn up by the Hungarian Presidency is from Luxembourg and Austria, which both refuse to abandon their system of tax deductions at source (and therefore savings account confidentiality) until Switzerland and other tax havens are forced to join an automatic exchange of information system with tax offices in EU countries (see EUROPE 10297).
In order to get the ball rolling and try and reach agreement by the end of June 2011, the Hungarian Presidency suggested that work should initially focus on expanding the scope of the directive to companies and new savings products and to start negotiating with Switzerland, Liechtenstein, Andorra, San Marino and Monaco; and to leave to one side for the moment the controversial question of the end of the “transition measures” whereby Luxembourg and Austria are exempt from the automatic exchange of tax details (Article 10 of the updated directive).
The Hungarian deal generated little enthusiasm among the Member States, which do not see the need to change the criteria laid down in 2003 on the end of the transition measures or not introduce into the amended directive the clause desired by Luxembourg whereby non-EU countries would have to join the automatic tax exchange information at the same time as EU Member States. Luxembourg would not agree to any compromise because of the great unknown that is the outcome of the tax negotiations between Germany and the United Kingdom and with Switzerland (see EUROPE 10244 and 10297) that would allow these countries to continue with confidential banking to the detriment of banks in Luxembourg and Austria. Italy is another country not happy with the situation because it will not agree to amending to the directive before the Commission publishes a report on how the current directive operates - highly unsatisfactorily, in Italy's view. (F.G./trans.fl)