Finance ministers from EU member states agreed on Tuesday to mandate the European Commission to begin negotiations on taxing savings with five third countries, but there is still no agreement on the directive for the exchange of data on interest from savings within the Union due to opposition from Austria and Luxembourg.
Austria and Luxembourg have agreed to give consent for the Commission’s mandate to negotiate with third countries – Switzerland, Liechtenstein, Andorra, Monaco, and San Marino, which are considered tax havens – on the exchange of data on interest from savings.
On the other hand, there is still no consensus on the new rules for taxing interest on savings. The Commission proposed that the automatic exchange of data on interest paid in one member state to citizens of other member states be expanded to all types of income.
Negotiations on the automatic exchange of data have been stalled for years as Austria and Luxembourg opposed the abolition of banking secrecy. Last month, Luxembourg announced it was ready to relent while Austria still showed restraint; however, there are no indications that an agreement could be reached today.
Both Austria and Luxembourg now emphasize that they cannot agree to new rules within the EU until an agreement is reached with the five third countries.
With the new rules on taxing savings, the EU aims to prevent tax evasion, which is also the main topic of the summit of heads of state that will take place next Wednesday, May 22.
The fight against tax evasion has come to the forefront after a scandal erupted when a vast network of tax havens known as Offshore Leaks was uncovered. A group of global investigative journalists revealed an elaborate and established system for hiding money from tax authorities.
