Brussels, 28/02/2000 (Agence Europe) - For those who still believed in the possibility of a European agreement on savings taxation, the meeting of Friday's high level taxation group was a further disappointment. This group was charged with giving concrete substance to the principle adopted by the Fifteen in December, whereby all citizens who reside in the EU should pay all their eligible taxes on all income from their savings. But, presenting a document based on the principle of generalised information exchange throughout the EU, the British questioned the principal adopted at negotiations carried out over the past two years, that is, the idea of "coexistence" between two options for the Member States: either the introduction of withholding tax on savings income of non-residents or the transmission of information on this subject to the tax authorities of the savers' countries of origin. "The British have implicitly refused to continue working on the basis of the principle of coexistence", summed up one diplomat.
The high level group met for the first time. The Member states, including the United Kingdom, were represented at political level - often by a secretary of State. The European Commissioner spokesman responsible for taxation issues said after work: "We are very disappointed as the British attitude brings into question a principle on which the Fifteen, including Gordon Brown, had shown their unanimous agreement in December 1997".
In the document presented on Friday, the United Kingdom affirms its determination to act against tax evasion. It considers that the establishment of an exchange of information, at the most international scale possible, is thus the most effective solution as it: a) would allow all the taxes due by Community residents to be collected in their countries of origin; b) would prevent the setting in place of a system for the redistribution of tax receipts between Member States; c) would correspond to the ideal of transparency in financial transactions defended by the OECD. This would require the lifting of the banking secret and outside the EU, admit the British authorities. But they say they are willing, to offset this, to invest in new computerised systems to speed up the transmission of information to partners and to encourage the development of similar practices in dependent UK territories.
The Portuguese Presidency announced it would be examining the British proposals. At the request of several delegations, it nonetheless maintained that it would do so "with a view to finding a solution on the basis of coexistence" between the two systems.
A further meeting of the high level group is foreseen for 22 March. A group of experts will be meeting in the meantime to clarify technical implications of a note presented on Friday by the European Commission on application of the legislation against money laundering in the United Kingdom, for which certain aspects are challenged.
The turn taken by the discussions on savings will not facilitate the work carried out in the context of the code of conduct on corporate taxation. "All countries potentially losing out in this exercise of convergence on corporate taxation have warned that they will not move until the United Kingdom makes a gesture on savings (Ed.: they include Belgium, Spain, Ireland and the Netherlands), explains one diplomat. The Commission threatened to take measures against certain preferential schemes granted to companies in the event of failure of tax negotiations (see EUROPE of 24 to 26 February). "But it would be favourable for the United Kingdom anyway", explains the same source, as none of the 66 harmful schemes listed are applied on its territory (17 are in force in its dependent territories).