Maximum pressure on Luxembourg and Austria
By Tanguy Verhoosel | Monday 14 May 2012
In an interview with
Europolitics(see box), Taxation Commissioner Algirdas Semeta makes no secret of his irritation with Luxembourg and Austria, which are more than likely to oppose any compromise on savings taxation at the 15 May Ecofin Council.
The Danish EU Presidency hopes at this meeting to hammer out a compromise on a mandate for the European Commission to renegotiate the Union’s agreements on savings taxation with Switzerland, Liechtenstein, Andorra, San Marino and Monaco (see
Europolitics4422). The aim is not only to extend the scope of the agreements to new products (life insurance contracts, etc) and to certain intermediaries (trusts, foundations, etc) so that they remain “equivalent” to the expected evolution of the EU’s savings taxation directive, but also to adapt them to certain “recent international developments” in the area of information exchange between tax administrations. Roughly, the Commission wants Berne, Vaduz, Andorra, San Marino and Monaco to apply criteria “as close as possible” to the EU’s – automatic information exchange – for 25 countries.
Luxembourg and Austria demand that, before opening talks on this basis with Switzerland, the 27 redefine the conditions under which the two member states will have to switch from withholding at the source to automatic information exchange. They wish to be on a strictly equal footing with Berne. If no progress is made on 15 May, despite the intense pressure being put on Luxembourg and Vienna, the subject is likely to be discussed at the European Council, on 28-29 June.
In March, the heads of state and government of the 27 member states found that “the negotiating directives for savings taxation agreements with third countries should be rapidly adopted”.
The Council and Commission were asked at the time to “report regularly on the state of play in this field, starting in June 2012”.
Interview with Commissioner Algirdas Semeta
What do you think of the attitude of Luxembourg and Austria?
It is incomprehensible. We are only at the beginning of the process. It puts them under no obligation to give the green light for opening negotiations with certain countries, including Switzerland. Once the talks have been concluded, the Commission will in any case have to submit the results to the 27 for their approval and the states will have to act unanimously. So, in short, if Luxembourg and Austria are not satisfied, they can say so then.
Luxembourg and Vienna want to delete in these mandates all references to the “recent international developments”. What does that mean?
It is up to these two states to explain why such a reference creates a problem for them. There would have to be a very good reason to delete it, because I don’t see what could possibly still justify holding up the mandates.
You seem angry…
It’s because savings taxation is not just the business of Luxembourg and Austria alone. Take Greece, for example, which is in serious financial difficulty: it is losing a lot of money because of this stalemate. We are asking taxpayers to make major financial efforts to reduce the impact of the crisis and at the same time states are not being permitted to increase their revenues by recovering part of the funds deposited in certain countries like Switzerland. It’s absurd.
But isn’t Greece trying to circumvent the barrier by negotiating a Rubik bilateral agreement with Switzerland?
It is negotiating, yes, but within the limits we have set, which have been accepted by Germany and the United Kingdom. There is no question of including elements that concern savings taxation in the agreement: the Union alone has competence in this area. And savings taxation represents the largest part of the financial stakes.
To cajole Luxembourg and Vienna, shouldn’t the goal of general use of automatic information exchange in the EU be set aside?
In 2009, the Swedish EU Presidency proposed to set a cut-off date for the end of the transitional period, in 2014. That idea was not supported [by countries like France, which holds banking secrecy in contempt - Ed].
Could another possible solution be to ask Switzerland, which has already had to chip away at its banking secrecy in recent years under outside pressure, to switch to the automatic exchange system, if only after a transitional period?
Obviously, we cannot prejudge the outcome of the negotiations that we would like to hold with Switzerland. But the Swiss are very good negotiators and we know that under the European savings taxation directive they are supposed to apply measures equivalent to those in force in the EU, not identical measures.