EU Ministers Agree On Tax Talks With Non-EU Countries

by Ulrika Lomas, Tax-News.com, Brussels

17 October 2001

EU Finance Ministers reached agreement yesterday (Tuesday) on a mandate to authorise the opening of a formal phase of savings taxation negotiations with six key non-EU countries on ways to tackle tax evasion.

The aim of the talks is to persuade America, Switzerland, Liechtenstein, San Marino, Monaco and Andorra to agree to adopt anti-tax evasion measures set out by the EU which have already been agreed to by member states whereby an information exchange system would be implemented regarding interest payments on non-residents' savings. This would allow for effective taxation of savings income.

The Feira European Council set a deadline of the end of 2002 for agreement to be reached with key non-EU countries to adopt an information-sharing system, and if that is achieved then the system will go fully into effect by 2009.

Under the EU proposals, member states and the six non-EU countries would be expected to share information on interest they pay to individual savers resident in the other relevant countries. For a transitional period of seven years, Belgium, Luxembourg and Austria would be allowed to apply a withholding tax instead of providing information, at a rate of 15 per cent for the first three years and 20 per cent for the remainder of the period.

According to EU Taxation Commissioner, Fritz Bolkestein, this is the first time the Commission has been mandated by EU governments to discuss taxation issues with non-EU countries.

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