Brussels, 15/05/2012 (Agence Europe) - On Tuesday 15 May 2012, the EU27 finance ministers failed to agree on a negotiating mandate for the European Commission for talks with Switzerland, Liechtenstein, Andorra, Monaco and San Marino to update their 2004 savings tax agreements with the EU.
Luxembourg and Austria still refuse to agree on a negotiating mandate out of fear of being forced to join an automatic exchange of information system, which would put an end to their secret bank accounts and inherent tax advantages. Luxembourg's finance minister, Luc Frieden, said he did not want to blindly veto debate but could not allow somebody to negotiate on Luxembourg's behalf without knowing what the negotiating mandate implied exactly. Austria's finance minister, Maria Fekter, said she had made it clear to the Commission that Austria cannot agree to lifting bank secrecy and automatic exchange of information and would not grant any negotiating mandate to this effect. Taxation Commissioner Algirdas Semeta described their attitude as “totally unjustifiable” because they were preventing the other 25 member states from gaining extra tax revenue from tax havens outside the EU. He said Austria and Luxembourg had all the guarantees they needed and nothing would be signed without their full consent because any updating of the tax agreements requires unanimous voting at the EU Council of Ministers. The issue will be discussed at the 28-29 June European summit.
The idea behind changing the tax deals with the five above-mentioned countries is to include the changes to the EU Savings Tax Directive (2003/48/EC) - changes currently being negotiated at EU Council of Ministers level. The changes are needed to cope with developments in savings products and investor behaviour by expanding the scope of the directive to cover not just the payment of interest, but also all other types of savings income and any product generating interest, like life insurance, pensions and “innovative” products. In addition, the directive will be changed to cover intermediaries like trust funds and foundations by including interest payments to such bodies as the equivalent of interest paid directly to end beneficiaries in order to avoid tax avoidance. The savings tax agreements with the EU's partner countries will have to be changed to reflect these changes and ensure equivalent measures apply outside the EU.
Another aim is to introduce an automatic exchange of information system with the five countries that is as similar as possible to the system the revised directive will apply in the EU27. The current tax agreement with Switzerland is very limited on this front and requires exchange of information upon request only for cases of proven fraud (as defined by Swiss law), whereas in the EU, automatic exchange of information already exists in 25 member states. Austria and Luxembourg are still using a manual exchange of information system upon request, which will apply on an exceptional basis for an unlimited period of time, along with the taxation of savings at source, of which the country where the holder of bank accounts in the two countries gets 75% of the tax deducted. Such a system would run out when the EU signs new exchange of information upon demand deals with the five countries in question, which would force Luxembourg and Austria to abandon secret bank accounts. They refuse to agree to this until Switzerland is forced to do the same, but the other member states are happy to agree to a deal that allows Switzerland to introduce equivalent measures to those applying in the EU. Luxembourg and Austria will not go along with an agreement that simply allows Switzerland to extend to the whole of the EU the concessions granted to Germany and the UK under the Rubik Agreements on the exchange of information upon demand. (FG/translf.l)