Austria Plans to Keep Withholding Tax in Bank Secrecy Talks
Austria’s government coalition said it was united in its goals to protect the country’s bank-secrecy rules while improving the exchange of tax data with other European Union countries.
Chancellor Werner Faymann and Vice Chancellor Michael Spindelegger, speaking today at their weekly joint press conference following the government meeting, said they want to retain the system of a withholding tax on interest and protect confidentiality rules for residents, while working with other nations against tax cheats. They played down impressions of a split following a weekend when Finance Minister Maria Fekter defied EU pressure on Austria to lift its secrecy laws.
“Our goal is to cooperate so that there are no tax cheaters who park their money in Austria,” Spindelegger said, according to a summary distributed by his conservative People’s Party. “Austria is not a tax haven,” he said. Faymann added that Austria would also work with Luxembourg, the other holdout nation that has sought exceptions from the EU’s crackdown on bank secrecy.
While Austria’s bank secrecy has been weakened since fully anonymous savings books were abolished 11 years ago, it is still a popular right that’s based on the country’s constitution. While it hasn’t attracted deposits from abroad to the same tune as Luxembourg’s mutual fund industry and Cyprus’s low taxes, Germany in particular has expressed frustration with its southern neighbor’s refusal to share names of German depositors.
Austria and Luxembourg had both opposed draft EU rules that would allow an automatic exchange of data among tax authorities in EU countries. That alliance broke down last week when Luxembourg dropped its opposition and said it planned to take part in the data exchange from 2015.
Austrian banks had 53.2 billion euros ($70.1 billion) in foreign deposits at the end of January, equivalent to about 15 percent of all deposits, according to the Austrian central bank. About two-thirds of the foreign deposits came from EU countries.
Raiffeisen Zentralbank Oesterreich AG Chief Executive Officer Walter Rothensteiner, who is also the president of the country’s bank lobby, joined other Austrian bank chiefs today in playing down the importance of the secrecy laws for the companies’ core business.
“The bank secrecy is more a question of consumer protection than a real issue for the banks,” Rothensteiner told journalists today. He hadn’t observed deposit withdrawals due to the debate, he added.
“The trust of the savers into the banks is still intact despite all efforts to the contrary,” he said.
Austria charges a withholding tax of 35 percent on interest income from non-residents, compared with 25 percent for residents. It shares that revenue with the home countries of the non-residents. Germany was the biggest recipient of such taxes from Austria, with 47.2 million euros in 2010, the latest data available on the Austrian finance ministry’s website show.
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