Brussels, 04/12/2001 (Agence Europe) - The Ecofin Council did not manage to reach a political agreement on the savings taxation directive, during its meeting of 4 December in Brussels. Luxembourg and Austria are still sticking to their positions regarding the beginning and the end of their derogations. Belgium, whose positions were initially in line with those of Austria and Luxembourg, seems, on the other hand, to be ready to accept a certain amount of flexibility. Council President, Belgian Finance Minister Didier Reynders hoped to reach an agreement at least on the content of the directive during the Ecofin Council meeting of 13 December, on the eve of the Laeken Summit. The technical aspects should be settled during a meeting at technical level on 7 December so that the Ecofin Council may give its stance on the basis of a text "without variant", he hoped. The aim is to reach a political agreement on the content of the directive, to allow the Commission to begin negotiations with third countries on this basis.
The EU will be asking third countries to adopt measures equivalent to those it is implementing with Switzerland, the United States, Andorra, Liechtenstein, Saint-Marin and Monaco. According to a compromise reached at the Feira Summit, the Council is expected to adopt, by end 2002, all of the "taxation package" on the basis of the result of negotiations with third countries.
A compromise seems possible on the problem of when the seven year transition period is to begin. This will allow Luxembourg, Austria and Belgium to be dispensed from the obligation of exchanging information on savings income between Member States until 2010 or 2011. The Commission had proposed that the period should begin with entry into force of the directive, on 1 January 2003. The Council Presidency proposed the date of 1 January 2004, playing on the difference between the date when the text is adopted and the date when it takes effect.
There are still significant differences of opinion, however, between the thirteen Member States and Luxembourg, Austria and Belgium regarding the automatic nature of the end of the transition period. The compromise defined at the Feira Summit and the Ecofin Council of November 2000 provide for the derogation to end automatically after 7 years. Luxembourg and Austria, however, would like the end of the derogation to be subject to a new vote of Council unanimity, in order to verify the effective application of the directive in the Member States and of equivalent measures in third countries and associated territories of the Netherlands and the United Kingdom.
The Luxembourg and Austrian ministers specified that, for their part, the measures adopted by the third countries should concern information sharing and be "equivalent" de facto, if not technically. On the other hand, measures implemented by the associated countries and territories of the United Kingdom and the Netherlands should be "exactly the same" as those adopted by the EU. "We are very keen on the conditions being fully respected both inside and outside", Luxembourg Prime Minister and Finance Minister Jean-Claude Juncker told the press. "Luxembourg's position is not likely to change and will not change", he went on, pointing out that he would not be at the Ecofin Council in person on 13 December. Austrian Finance Minister Karl-Heinz Grasser said for his part that "we must be sure, after seven years, that the third countries also practice information exchange, otherwise the income from capital could be lost from Austria". A condition that could be difficult for Switzerland to accept, as it has always stated that although it is willing to modify its withholding tax system, the "banking secret is not negotiable".
Didier Reynders specified that the "Presidency will, on 13 December, be proposing a text that provides for 'automatic transition' to information exchange after the seven year period" and that "the Presidency and Belgium take the same stance". Taxation Commissioner Frits Bolkestein regretted that "some Member States are seeking to renegotiate" what had been reached by unanimity during the Ecofin Council of November 2000, and said he hoped they would "find a way out of this mess".