Finance Minister Proell Defends Austrian Tax Law

by Ulrika Lomas, Tax-News.com, Brussels

31 August 2009

Austrian finance minister, Josef Proell (pictured), has written an article for Europeanvoice.com, in which he claims that Austria is far more willing to prevent tax evasion than the G20 appears to be. In particular, the US and UK have 'the best instruments to hide money', Proell states.

Proell denies that Austria makes things easy for tax evaders, because it is impossible to open bank accounts without identifying the beneficial owner. Foreign tax authorities are provided with information on accounts where requests are made arising from criminal or administrative investigations, subject to the accountholder being given notice of the investigation and leave to appeal against it, according to Proell.

Proell states that Austria levies a withholding tax of 20% in the case of other EU countries, and the Inland Revenue Service has full access of data on US citizen's accounts, because the main Austrian banks have 'qualified intermediary' status.

In the US, shell corporations can be formed in such jurisdictions as Delaware, Montana, Wyoming and Nevada and the beneficial owner of the corporation may not even be known by the authorities, according to Proell, and the bank accounts are effectively anonymous, something long disallowed in Austria, Switzerland and Luxembourg. Anglo-Saxon common law trusts are not recognized in continental Europe and Proell points out that only in South Africa are there publicly available registers of the beneficial owners of trusts - tax authorities often have no way of knowing who is the beneficial owner of a trust account or in which jurisdiction the funds are taxable.

Proell concludes by saying that Austria is willing to support a more comprehensive form of tax transparency, which would include 'all forms of anonymous investment vehicles', but asks whether the other G20 countries would support this?

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