March 4 (Bloomberg) -- The French government plans to use its presidency of the European Union this year to crack down on tax havens, taking up a cause championed by Germany as it pursues an investigation into funds held in Liechtenstein.

``We will support the French presidency's aims of tackling tax havens and states operating privileged tax systems with the aim of achieving harmonized taxation,'' German Chancellor Angela Merkel told a joint press conference with French President Nicolas Sarkozy late yesterday. These are challenges ``which France wants to achieve during its presidency'' of the EU.

``On tax havens'' and matters of energy-company ownership, ``our position is the same'' as that of Germany, Sarkozy said at the press conference in Hanover, Germany. France holds the rotating six-month EU presidency during the second half of 2008.

Germany is pressing for tougher rules that would force non- EU tax havens to cooperate more closely with the 27-nation bloc. Germany's case has been strengthened by an investigation into funds placed in Liechtenstein that has spread to at least 16 countries worldwide, most of them EU member states.

German Finance Minister Peer Steinbrueck, who pushed the matter at a meeting of fellow EU finance ministers in Brussels yesterday and today, said he was ``pleasantly surprised'' by the support he won for widening the application of EU rules to include tax havens such as Hong Kong, Macao and Singapore.

Savings Tax Directive

The European Commission, the EU's executive arm, will present a report in May on possible changes to the so-called Savings Tax Directive after Germany won the backing of France, Denmark, Finland, Sweden, Italy and Spain, as well as the U.K, and the Netherlands, he said.

``Double-taxation agreements in some European states mustn't undermine the efforts by the commission to safeguard Europe's tax base,'' Steinbrueck said.

Liechtenstein, Monaco and Andorra are on a list of ``uncooperative tax havens'' published by the Paris-based Organization for Economic Cooperation and Development. Germany wants to force countries with strict bank-secrecy rules to disclose information about the identity of account holders, and favors EU-wide implementation of OECD tax guidelines.

``I think fundamentally people should pay taxes on their savings, so anything we can do to increase that discipline I support,'' Dutch Finance Minister Wouter Bos said in Brussels.

The EU should move toward full information sharing and replace the use of withholding taxes by the selected countries, which was intended as an ``interim arrangement,'' while seeking a more sweeping accord, EU Taxation Commissioner Laszlo Kovacs said in a news conference today.

`Uniform Arrangements'

``I'm very much in favor of final arrangements and uniform arrangements,'' Kovacs said. He pledged to speed up a report due by the end of June on how the rules are working, a prelude to possible proposals to amend the law.

A spokesperson for the U.K. Treasury, speaking on customary condition of anonymity, said the EU tax directive has already led to increased transparency and cooperation across borders to prevent tax evasion. The U.K. supports the commission's proposals to bring forward the timing of the directive's review, the spokesperson said.

Steinbrueck also hinted at the need for tighter regulation of tax matters in EU member states Luxembourg and Austria.

``Luxembourg is not a tax haven in the stricter sense, but we know it is difficult to get certain information,'' Steinbrueck said. ``That's also true of Austria.''

Withholding Tax

In the decade and a half of negotiations over the EU law, Luxembourg and Austria plus Belgium won the right not to hand over the names of taxpayers to foreign governments without the person's consent. Instead, those states apply a withholding tax and share the revenue with the person's home country. Liechtenstein, Switzerland and neighboring countries such as Andorra and Monaco joined the system with a similar arrangement.

Austrian Finance Minister Wilhelm Molterer said Austrian authorities had been in contact with their German counterparts ``from the start'' of the Liechtenstein investigation.

``Austrians face the full ramifications of Austria's criminal law should there be evidence that they've been involved in these actions,'' he said. ``We're ready to discuss a widening of the application'' of the savings tax directive should the commission propose changes, Molterer said.

``There must be no snap decision and no taboos,'' Luxembourg's Prime and Finance Minister Jean-Claude Juncker said, predicting a ``difficult debate'' on the matter. ``I'm very much in favor of having European rules that are watertight.''

To contact the reporter on this story: Rainer Buergin in Brussels at rbuergin1@bloomberg.net; Brian Parkin in Hanover, Germany at bparkin@bloomberg.net.

Last Updated: March 4, 2008 13:32 EST