Brussels, 08/06/2009 (Agence Europe) - On Tuesday 9 June, the European Finance Ministers discussed measures to promote good fiscal governance on the basis of the specific communication presented at the end of April by the European Commission (EUROPE 9891). According to the provisional version of the conclusions to be adopted, of which EUROPE has obtained a copy, they will recommend that work on the revision of directive 2003/48/EC on the taxation of savings income be continued rapidly, "in order to reach a political agreement by autumn 2009" (EUROPE 9782). They plead in favour of "an extension of the scope of application of the directive, so that it also covers other revenues broadly equivalent to interest from savings" (e.g. certain life-insurance contracts, income from investment funds). The proposed compromise of the Czech Presidency, which was put forward in early April, suggests that the directive be applied to "all paid income (…) which relates to securities of any nature if the conditions of a yield laid down on the date of issuing guarantee that when it expires, the investor will get back at least 95% the capital invested". The ministers are likely to retain the so-called "transparency" approach seen by the Commission as the most appropriate measure to fight against mechanisms which make it possible to avoid taxation by using non-European interim entities (e.g. foundations and trusts), but held by physical persons subject to taxation in the EU. Discussions will continue in future with a view to also including in the scope of application of the directive "certain incorporated bodies and legal constructions situated within the EU or the dependent or associated territories, but not subject to tax".
Negotiations on the taxation of income from physical savings cannot be separated from the international context: the G20 Summit in London on the economic and financial crisis shifted the lines in the fight against tax evasion and tax fraud. A number of jurisdictions, some European and some not, were named and shamed and have committed to observe the standards of the OECD on the exchange of information on request, and some of them have already signed new bilateral agreements to this effect (e.g. codicil to the bilateral tax convention signed on Wednesday 3 June by France and Luxembourg). The Ecofin Council will also note "with satisfaction the fact that there is an international consensus forming on the need to improve administrative cooperation and mutual assistance in taxation matters". However, directive 2003/48/EC contains a clause whereby the interim period authorised by three Member States (Belgium, Austria and Luxembourg) to operate a deduction at source rather than the automatic exchange of information will come to an end with the entry into force of the final agreement on the exchange of tax information on request to be signed by the EU by those countries (Andorra, Liechtenstein, Monaco, San Marino and Switzerland). Once these agreements are signed, "the end of the transitional period will become concrete", a European source confirmed. Before the Ecofin Council on Tuesday, the Commission will take stock of the latest negotiations with Liechtenstein to lead to the signature of an anti-fraud agreement at EU level (9838). This agreement, which will cover direct and indirect taxation, will include clauses on the exchange of information on request. Once it is concluded, it will constitute a precedent ahead of similar agreements to be concluded with four other third countries, a situation which will lead to the removal of the interim period for directive 2003/48/EC. In their draft conclusions, the ministers call on the Commission to "launch consultations with Monaco, Andorra, San Marino and Switzerland on agreements implementing the recognized international standards", even though they will not at this stage be granting it an official mandate to do this. (M.B./trans.fl)