Brussels, 06/12/2013 (Agence Europe) - There is little chance of unanimous adoption of the revised savings tax directive at the Ecofin Council on Tuesday 10 December because it is not expected that Luxembourg and Austria will lift their veto, despite pressure from the European summit for agreement to be reached in December and the change of government in Luxembourg.
Former Luxembourg finance minister Luc Frieden said at the Ecofin Council in November that his government was unhappy about lack of progress in the talks between the EU and Switzerland, Liechtenstein, Andorra, San Marino and Monaco to alter the existing bilateral tax deals and introduce equivalent measures to the revised savings tax directive (taxing all savings products that generate interest or similar income and automatic exchange of information about assets owned by foreign residents) (see EUROPE 10964).
The Commission says the negotiations are progressing well with four countries and informal talks with Switzerland are well underway, although the Swiss government is awaiting a negotiating mandate from the Swiss parliament before opening formal talks.
A breakthrough is unlikely until rules are introduced at the OECD, possibly at the end of February 2014, on automatic exchange of bank information (AEI), as required by the G20 (see EUROPE 10832). The Commission wants AEI to be incorporated into the revised directive on administrative cooperation in tax matters that will come into force in 2015 (Luxembourg has signed up to this), and the revised savings tax directive, which the bilateral tax deals with the five non-EU countries are to be aligned with. Acceptance of the two directives by Switzerland would put it on the same footing as the EU and would discourage foreign residents with bank accounts in Luxembourg and Austria from shifting their cash to Switzerland. Berne requires in return for a compromise with the EU that the EU repay tax arrears owed to Switzerland by EU passport-holders with savings in the country. This needs to be dealt with at national level because the EU has no powers in this domain, but only for future agreements, explained Heinz Zourek, head of taxation at the European Commission, on Thursday 5 December. Another criterion being laid down by Switzerland is for the EU to lift its restrictions on access to the EU financial market under the revised MiFID directive, which the Commission is refusing to countenance. Zourek said the two matters were different and should not be linked. (FG/transl.fl)