Brussels, 16/03/2009 (Agence Europe) - Several European Union member states (Austria, Belgium and Austria) and European non-member countries (Andorra, Lichtenstein, and Switzerland) announced last week that they were to amend their tax legislation so that there could be greater cooperation with the authorities of other countries investigating tax evasion and fraud by their nationals. The aim is to avoid featuring on a blacklist of uncooperative tax havens, a threat brandished time and time again by the European members of the G20, such as Germany and France. This development, however, does not sound the death knell of banking secrecy. On Saturday 14 March, the finance ministers of the G20 kept the pressure on the relevant international organisations to “identify non-cooperative jurisdictions and develop a toolbox of counter measures” (see related article).
Austria and Luxembourg have said they are ready to fall into line with Organisation for Economic Cooperation and Development (OECD) standards on mutual administrative assistance in cases of justified suspicion of tax evasion and/or fraud. Since 2002, the OECD has been developing international standards on transparency and the exchange of tax information. The organisation, a supporter of tax competition, says that this competition has to be based on the services provided by each system and not on banking secrecy. At the start of February, the European Commission proposed new rules to abolish banking secrecy in the EU when a member state receives a request for assistance on a tax issue from another member state (see EUROPE 9857).
Belgian Finance Minister Didier Reynders said that Belgium had repeated that it was prepared, by 2010, to give up the withholding tax for which it had opted under directive 2003/48/EC on taxation of savings revenue (see EUROPE 9774). The withholding tax means that Austria, Belgium and Luxembourg can withhold the identity of non-resident European citizens who have deposited savings in these countries, but requires them to impose tax (20% until mid-2011 and 35% thereafter) on the sums deposited. Five non-member states (Andorra, Liechtenstein, Monaco, San Marino and Switzerland) and 10 dependent and associated territories of the United Kingdom (Guernsey, Jersey, Isle of Man, and five British territories in the Caribbean) and the Netherlands (Dutch West Indies and Aruba) use a similar system by virtue of bilateral treaties signed with the EU. The proposal for the review of the directive 2003/48/EEC, brought forward in November, retains this system (see EUROPE 9782).
Hitherto, 49 bilateral tax information exchange agreements have been signed on the basis of OECD standards since 2000. The financial crisis, which is hampering public finances and shining a bright light on a number of opaque transactions in off-shore financial centres by financial institutions supported by public money, seems to have set up a real knock-on effect. Since 2008, 26 new bilateral agreements have been signed, for example, between member states and UK associated territories such as Jersey (agreements signed with Denmark, Finland, Germany, Sweden and the United Kingdom), Guernsey (Denmark, Finland, the Netherlands, Sweden, the United Kingdom) and the Isle of Man (Germany, Ireland, and the United Kingdom). The same is true for Spain with the Dutch West Indies. The Cayman Islands will sign seven agreements with the northern countries in April. Liechtenstein and the principalities of Andorra and Monaco have indicated their willingness to comply with OECD standards in the future. (M.B./transl/rt)