EU finance ministers sought to strike a deal Tuesday on new information-sharing measures to better fight tax evasion, despite wariness from Austria and Luxembourg.
The battle against tax evasion has become a global rallying cry, but Austria and Luxembourg – two of Europe’s banking-secrecy stalwarts – have dragged their heels on new EU regulation amid fears that they may become less attractive financial destinations.
The measures under consideration would force the European Union’s 28 countries to automatically share information on all financial activities carried out by EU residents, so their income can be properly taxed.
The move would help bring the bloc in line with new international standards from the Organization for Economic Cooperation and Development (OECD), which foresee an annual exchange of information between governments on accounts held by individuals and entities.
The first information exchanges under the OECD regime are slated for 2017, a date that the EU wants to match. But Austria and Luxembourg have been pushing for an extra year, saying they need more time to be ready, according to diplomats.
“We are asking them to be reasonable,” one diplomat said on condition of anonymity. “An extra year would be a negative example being provided by Europe.”
But Austrian Finance Minister Hans Joerg Schelling argued that many countries in the Group of 20 major economies – notably the banking hubs of Switzerland, Liechtenstein and the United States – will only start exchanging information in 2018.
“We will only deliver from 2018,” Schelling said ahead of the meeting with his EU counterparts in Luxembourg. “It’s not at all a blockade, that’s what we agreed to.”
Luxembourg was showing some willingness to compromise, sources said.
EU governments are estimated to lose 1 trillion euros (1.3 trillion dollars) annually in taxes that go uncollected because of fraud.
Also on Tuesday, the EU ministers signed a joint statement with their Swiss counterpart meant to end a long-standing disagreement about business taxation. Swiss Finance Minister Eveline Widmer-Schlumpf said her country wants a “level playing field.”
“I think it is also in the interest of Switzerland that all play by the same rules,” she said in Luxembourg. “I think it is a good signal today that we are talking with one another and finding solutions.”