Bloomberg News

Luxembourg, Austria Veto EU Effort to Open Savings Tax Talks

May 15, 2012

Luxembourg and Austria vetoed negotiations over the extension of a European savings tax, fearing they would be forced to give up the banking secrecy that attracts foreign depositors.

The two countries blocked the European Union from starting talks on updating the seven-year-old tax accord with Switzerland, Liechtenstein, Monaco, Andorra and San Marino.

Finance ministers from the two countries opposed backdoor attempts to loosen their banking secrecy rules, while remaining open to widening the tax beyond interest payments to cover a broader range of investment products.

“I will be blunt,” EU Taxation Commissioner Algirdas Semeta told reporters after the ministers met in Brussels today. “The position that Austria and Luxembourg have taken on this issue is grossly unfair.”

Under the 2005 accord, both countries withhold tax on interest income paid to depositors from other EU states while protecting their identities. Other EU states transfer the income data to the depositor’s home tax authority.

Luxembourg Finance Minister Luc Frieden said the EU needs to narrow its negotiating plan before his nation could consider signing off. In particular, he said the commission, the EU’s regulatory arm, hasn’t been “precise” in its goals.

“What are the international developments?” Frieden told reporters after the meeting. “No one could tell us. I don’t give someone a mandate if I don’t know what he is doing. And secondly there was no real debate.”

‘Besieged’

Austria also won’t bow to pressure to loosen its banking secrecy rules as part of a Europe-wide interest taxation plan, Finance Minister Maria Fekter said.

“I’m besieged from all sides and you know me: I will stand my ground,” Fekter told reporters before today’s meeting.

All EU tax decisions require unanimity among the 27 governments.

The EU ministers today did agree to move forward with the commission’s 2012 review of value-added tax, a wide-ranging sales tax that is one of the bloc’s chief revenue raisers. The region is looking at whether public-sector entities that compete with the private sector should pay the tax, and when countries can lower the VAT on selected industries.

To contact the reporters on this story: James G. Neuger at jneuger@bloomberg.net; Rebecca Christie in Brussels at rchristie4@bloomberg.net; Josiane Kremer at jkremer4@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net


The Good Business Issue
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus