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Austria and Luxembourg block progress on EU fight against tax evasion
28 January 2010
by Marta Ruiz
On the 19th January, the European Union Council discussed savings taxation and other tax governance measures, which are all priorities for the Spanish EU presidency. The presidency has committed to pushing the agenda forward, and many other Member states including France, the UK and Germany are in support this. However, a consensus among the 27 Member states is required, and two Member states- Austria and Luxembourg - are fiercely opposed to any substantial progress on this issue.
European Civil Society Organisations (CSOs), including Eurodad,
have been campaigning for a revision of the current European savings tax directive that would ensure that automatic information exchange applies not only to individuals but also to all legal entities including trusts. The economic crisis and the need to find extra resources sees most EU member states pushing for progress on this directive.
The EU's proposed draft
extends the scope of the directive to:
– all savings income and products that generate interest or equivalent income;
– certain entities situated outside the EU, such as trusts, foundations and investment companies, which receive income for the benefit of individuals resident in a member state;
– intermediate structures that are not taxed (such as certain types of trusts and partnerships) and which, as "paying agent upon receipt", would be required to apply the directive to the receipt of interest payments from any upstream economic operator, whether or not established in the EU, as long as the beneficial owner is an individual resident in an EU member state.
Austria and Luxembourg are opposing the new draft directive until other non-EU countries including Andorra, Monaco, Liechtenstein, San Marino and Switzerland comply with the reviewed directive as well. Another condition they put on the table is that, with the new directive in place, they would still benefit from the transitional arrangement (exemption of automatic information exchange compensated for by withholding tax) until Switzerland agrees to automatic information exchange. This would go against EU council conclusions from 2000 stating that the transitional period should expire by July 2012 at the latest.
There is absolutely no political sense in such a double condition. EU member states should not neglect their responsibility to fighting tax evasion simply because some non-members have refused to comply. The EU should first obtain a strong directive among its member states. Not only would this enable the recovery of much needed resources in increasingly deficit European countries, but it would also be a strong signal that Europe can lead on the fight against tax evasion at a global level.
See also: Tax Justice Network blog in German: http://steuergerechtigkeit.blogspot.com/2010/01/osterreichs-fpo-fur-automatischen.html