EU Talks On Savings Tax Directive Collapse

by Ulrika Lomas, Tax-News.com, Brussels

06 December 2001

Talks over a European Union plan to tax non-residents' savings have collapsed after Luxembourg and Austria have objected to the plan and insist that if they have to make amendments to their banking secrecy rules then so should other other tax havens such as Monaco, Lichtenstein and Switzerland.

'Luxembourg's position is not open to change and will not change,' said the principality's Prime Minister Jean-Claude Juncker.

Under the EU proposals, member states and six non-EU countries (America, Switzerland, Liechtenstein, San Marino, Monaco and Andorra) 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 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.

But Luxembourg and Austria fear that many accounts could disappear across the border, and want an agreement that the same provisions be forced on non-EU members such as Switzerland.

EU Commissioner Frits Bolkestein was not amused at the news, saying: 'It would be very disappointing if member states try to renegotiate a unanimous agreement. New proposals presented by the Commission in July were based on that unanimous agreement.'

The talks are due to begin all over again at the Laeken summit on 13 December just a few days before the planned launch of the euro.

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