Luxembourg Prepared To Negotiate On Banking Secrecy

by Ulrika Lomas, Tax-News.com, Brussels

04 February 2009

In the light of recent proposals by the European Commission to tighten its rules on banking secrecy, Luxembourg’s Prime Minister Jean-Claude Juncker has revealed that he is prepared to negotiate.

Frequently challenged about its lack of transparency, Luxembourg’s Prime Minister has revealed that the country is prepared to discuss the abolition of banking secrecy with the European Commission. However, given that Luxembourg has its own particular position on the issue, Juncker has also made clear that these discussions will form part of a two-way dialogue.

Stepping up the campaign to combat tax evasion and fraud, EU Tax Commissioner Laszlo Kovacs presented proposals to tighten European rules on banking secrecy for non-residents earlier this week. If adopted, Luxembourg, Austria and Belgium – three European member states which still preserve traditional banking secrecy – will no longer be able to cite banking secrecy as a reason to refuse information exchange with another European country.

With its position then strengthened, Brussels hopes to influence the attitude of third countries continuing to operate a banking secrecy policy, such as Switzerland and Liechtenstein.

The new proposal is the first time that Brussels has directly targeted banking secrecy. Nevertheless, if it is to be adopted, it requires the unanimous backing from EU member states.

Austria has already expressed its opposition to the plans, arguing that abandoning banking secrecy is not prudent, since Austrian banks would become less competitive than their rivals in Switzerland and Liechtenstein.

A spokesman from the Austrian Ministry of Finance Harald Waiglein has warned that a unilateral solution, detrimental to Austria, would not be approved.

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