Brussels, 26/09/2002 (Agence Europe) - Negotiations between the United States and the EU for an agreement on savings tax continue. Ecofin Council President Thor Pedersen is to meet US Under-Secretary for the Treasury Kenneth Dam on Saturday on the fringe of the IMF meeting, Taxation Commissioner Frits Bolkestein's spokesperson said on Thursday. Jonathan Todd was reacting to declarations by the US Administration published on Thursday by The Financial Times. According to the British daily, the president of the economic advisers to the White House, Glenn Hubbard, said the United States was not ready to conclude an agreement on the exchange of information between the European and American tax administrations on the savings income of European residents in the United States. He said they were not in favour of the European initiative on savings income.
Glenn Hubbard's statements seem to confirm an about-turn within the US government, with the Bush Administration being clearly less in favour of an agreement on taxation than the Clinton Administration. In July this year, the Treasury Department had withdrawn a draft law which would have made it compulsory for American financial bodies to provide extensive information on savings income invested in the United States by non-residents. He replaced it by a draft law that not only limits the extent of information to be provided but also the number of countries concerned. Luxembourg, Belgium and Austria are the only EU countries for which the provision of information is not required by the American bill.
The Commission's spokesperson nonetheless said on Thursday that the EU and the United States had agreed to accelerate negotiations during the meeting between Commissioner Bolkestein and Under Secretary Dam on 29 May. Both parties, he added, have ongoing contacts on how to reduce tax evasion on the basis of an exchange of appropriate information. Along these lines, the US Treasury representative, Tara Bradshaw, declared, according to The Financial Times, that Washington is in favour of "appropriate tailored information exchange relationships". The legal form of the agreement to be concluded between the EU and the United States has not yet been defined. It could be bilateral agreements between the United States and each Member State but, stresses the spokesperson, the "most important thing is that, before the end of the year, an overall political agreement is reached between the EU and the United States".
During the last informal Ecofin Council, in Copenhagen, Frits Bolkestein had noted that the Commission had been invited to negotiate agreements with third countries, mainly Switzerland and the United States, so that these countries adopt "equivalent" and not "equal" measures to those implemented by the EU in the context of the directive on savings taxation that is to be adopted at the end of the year. In other words, the Commissioner had stressed, the third countries do not have to apply "automatic" exchange of information between tax administrations, like the Fifteen. Luxembourg challenges such an interpretation, considering that the third countries must also undertake to exchange information automatically.
We recall that Luxembourg, Austria and Belgium, which obtained a 7-year derogation before taking part in information exchange, make their support of the tax package at the end of the year subject to conclusion of the agreement with third countries. Negotiations with Switzerland seem, for now, to be standing still: Bern is ready to apply withholding on savings income of EU residents, together with information exchange as requested for fraud cases. The Commission is also calling for information to be exchanged on tax evasion. Both parties were to meet before the meeting scheduled for 8 October between Swiss Federal Minister Kaspar Villiger and the Ecofin Council, but no date has yet been fixed.