Luxembourg stalls agreement on EU tax evasion law
The Grand Duchy of Luxembourg, a city state of just over a half million inhabitants, on Tuesday refused to agree on a proposed key EU tax evasion law at the monthly Ecofin meeting of European Union finance ministers.
Algirdas Šemeta, EU taxation Commissioner, said Tuesday’s failure was “disappointing” because the legislation on an EU-wide automatic exchange of information on interest gains from bank deposits would enable governments to “identify and chase up tax evaders.”
Luxembourg, which is effectively a financial services tax haven, together with Austria, which offers secrecy to foreign depositors, have been blocking agreement on the law since 2008. In the past year with moves towards addressing tax evasion in Europe, the two countries insisted that they would only agree after other rival tax havens – – Switzerland, Liechtenstein, Monaco, Andorra and San Marino – – had signed up to the same rules.
Michael Spindelegger, Austrian finance minister, said on Monday a deal on extending a European Union savings tax directive was in Luxembourg’s hands.
Austria “can agree to this tomorrow – – it’s not up to us if there isn’t agreement,” Spindelegger told reporters n Brussels. “It’s up to Luxembourg.”
“All the conditions are met now to allow you, as finance ministers, to sign on the dotted line,” Algirdas Šemeta said.
Pierre Gramegna, Luxembourg finance minister, hinted that there may be agreement next week, when the leaders of all EU countries meet in Brussels. “This is such an important change in our policy that it has to be announced and taken by our prime minister,” Gramegna said.
“We’ve been working on this for such a long time, whether we agree today or in four weeks, that doesn’t kill me either,” Wolfgang Schäuble, German finance minister said, adding he was confident Luxembourg would drop its opposition.
Meanwhile, the finance ministers on Tuesday drafted compromise proposals on the scheme to protect taxpayers from bank bailouts.
The planned “single resolution mechanism” for the European banking union, would involve setting up an agency which could close down failing banks.
The proposals are due to be presented Wednesday to the European Parliament in Strasbourg. They would need to be agreed on by the EU government and European leaders by the end of March, before the parliament is dissolved ahead of elections in May.