Austria and Luxembourg block tax haven clampdown
European Union Tax Commisioner Laszlo Kovacs said yesterday that there is support among European finance ministers for a tightening on tax haven rules, but it will take some time for new regulations to be passed as Austria and Luxembourg are dragging their heels.
EU minsters met in Brussels to discuss proposals on how to improve the 2005 directive.
Any change in the rules would require unanimous backing from EU member states, and the German Finance Minister Peer Steinbrueck acknowlegded that Austria and Luxembourg are reluctant to sign up because it would put an end to their secretive banking practices.
At the moment, the savings tax directive requires EU members to share tax information with one other on interest income kept by account holders from other EU countries, according to online French daily AFP.
However, there are special arrangements for Austria, Belgium and Luxembourg under which they impose a witholding tax rather than exchanging information.
The EU has similar bilateral agreements with a clutch of countries known for their banking secrecy laws, including Switzerland and Liechtenstein.
Kovacs said at the meeting: "What was emphasized by a number of ministers was to extend the scope of the directive which is rather limited now."
An interim report from the commission is due by September 30.
EU ministers launched a push to for a review on the tax directive after Lichtenstien and Berlin were caught up in controversy over hiding taxes in February.
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