Brussels, 22/05/2013 (Agence Europe) - The EU will be able to roll out the automatic exchange of bank information by 2015 and will decide on a coordinated policy approach to be defended at international bodies. On company taxation, by July 2013, it will adopt legislation to better tackle VAT fraud and, by the end of the year, legislative texts to better address tax avoidance and planning, and also money-laundering. These are the main results of a summit of EU heads of state and/or government in Brussels on 22 May to discuss how to tackle tax fraud, tax evasion and tax havens, results highlighted by the president of the European Council and the president of the European Commission on leaving the meeting.
Automatic exchange of bank information. The EU will be able from 1 January 2015 onwards to apply an automatic exchange of bank information system among tax offices as set out in the EU savings tax directive, as Luxembourg and Austria have agreed to remove their reservations and for the directive to apply to other financial products and bodies, like insurance contracts, trust funds and foundations (see EUROPE 10849). However, fearing competition from tax havens in Europe that are not part of the EU, Luxembourg and Austria will continue to make their signing of the updated savings tax directive conditional upon the European Commission signing new tax deals with Switzerland, Liechtenstein, Andorra, Monaco and San Marino, forcing these countries to introduce similar obligations to those laid down in the directive for EU member states. Jean-Claude Juncker, the prime minister of Luxembourg, told reporters on arriving at the meeting that his country would abandon secret bank accounts and move towards the automatic exchange of information, which it wants to introduce by 1 January 2015 as long as negotiations have been held by then with non-EU nations. The Austrian chancellor, Werner Feynman, made similar comments. Getting the update of the savings tax directive rolling, which the summit's conclusions document say will happen by the end of 2013, will depend therefore on negotiations being concluded with the five above-mentioned non-EU states. What would happen if such agreements are not concluded? The French president, François Hollande, said it was not the outcome of the talks that would determine Europe's position on savings tax and whatever happened, the savings tax directive would be adopted at the end of the year. His comments were confirmed by the Austrian chancellor and the PM of Luxembourg. Juncker said that the two countries were not making their final position depend on the outcome of talks, but they are demanding that talks take place so that it is possible to see to what extent the extension of the exchange of information requirement can be applied compartment by compartment. He said they were not demanding that Switzerland apply the same rules as within the European Union, but equivalent rules, and that would be seen when an autopsy is carried out. The German chancellor, Angela Merkel, welcomed the outcome, saying that Austria and Luxembourg, like the others, have affirmed the principle of exchange of information by insisting on the opening of talks with non-EU countries. Luxembourg talked about all types of income, she added. The matter will be discussed at the next EU summit (in June).
The British prime minister, David Cameron, is also happy with the outcome. He stressed the importance of it for the automatic exchange of information at global level to combat tax fraud. Full exchange of tax information, potentially with all European countries, is a genuine breakthrough and if combined with action at the G8, G20 and OECD, there is a real opportunity to see international action to settle the problem, he added. The summit pledged to introduce a coordinated European approach, to take to all the international bodies to help ensure the spread of automatic exchange of bank information as an international standard. “Every country knows that full exchange of information on all types of income will become necessary in the future”, said Chancellor Markel.
Company taxation. In terms of tackling VAT fraud, the heads of state and/or government have asked the Council to adopt, before the end of June, the Commission's draft directives putting in place a rapid reaction mechanism on fraud and the reverse charge mechanism (see EUROPE 10667). On tax avoidance and planning, the summit set a deadline of the end of the year for adoption by the Council of the proposed review of the parent subsidiary directive to be tabled by then by the European Commission. “We can't accept that certain companies, whether European or not, can escape paying tax through conduct which is currently legal. That is why we need to coordinate efforts at European level, harmonise a number of rules and ensure that there are no strategies that allow these businesses to escape taxation”, said President Hollande.
On erosion of the tax base, the transfer of profits and harmful tax measures in the EU, the summit wants efforts undertaken on strengthening the company tax code of conduct to be concluded. It also calls for work to be continued in international fora, such as the OECD, to define international standards on sound tax governance.
Tackling money laundering. To combat this phenomenon both in the internal market and internationally, the summit calls for global action to identify the real accounts holders and nominees (trusts, foundations, shell companies). The revised version of the third directive on money laundering will be adopted by the end of the year. David Cameron said that all countries should probably have to exchange their information, all countries should take action on the ownership of profits so that it is known who owns what.
The Council will assess what has been achieved and progress made in all these areas before the December summit. (FG/transl.fl)