Austria Seeks Tax Compromise With EU On After Standoff

Austria is pushing the European Union to take a tougher stance toward offshore financial centers in a long-delayed tax agreement in an effort to overcome political deadlock when EU finance ministers meet next week.

Austria and Luxembourg, the two holdouts in the EU tax talks, last week put forward proposals to change planned updates to the EU’s savings tax pact, according to documents obtained by Bloomberg News. The two nations have revived the tax talks by dropping their opposition to automatic information exchange, a long-time sticking point in the debate.

Austrian Chancellor Werner Faymann said his nation now has reached internal agreement on how to negotiate the issue.

“I’m glad we’re making progress and I dare say that I expect a positive result,” Faymann told reporters in Vienna today. Austria is governed by a coalition of Faymann’s centre- left Social Democrats and the conservative People’s Party, which has taken a harder line on the EU tax talks.

EU finance ministers will discuss the savings tax directive on May 14 along with proposals on how the 27-nation bloc negotiates tax-data exchanges with countries like Liechtenstein, Switzerland, Monaco, San Marino and Andorra. EU leaders also will take up the tax issues at a summit on May 22, when they are set to discuss broader efforts to combat tax evasion and fraud.

“We’re very glad the Austrians are now constructively engaged in the discussion and we still hope that we can get agreement on this very important file,” Emer Traynor, a spokeswoman for EU Tax Commissioner Algirdas Semeta, said today in a telephone interview.

‘Step Forward’

If the EU can break its deadlock, “it would be a great step forward in terms of both showing that it’s actually possible and also of course to break some of the secrecy, particularly in Austria and Luxembourg,” said Oygunn Brynildsen, senior policy officer at Eurodad, a Brussels-based network of non-governmental policy organizations.

Austria and Luxembourg say the savings-tax accord update needs to include a “clear access to ownership information” such as beneficiaries of offshore trusts, according to a May 2 proposal to an EU tax working group. That proposal also asks for assurance that there can be separate handling of existing bilateral agreements, such as Austria’s pacts with Switzerland and Liechtenstein.

It’s not clear how many of the new requests will be added into the EU proposal. A May 3 draft of the EU updated savings pact calls for improving the quality of information used to establish the identity and residence of beneficial owners, while also noting that “the directive does not impose an obligation on member states to introduce tax identification numbers.”

To contact the reporters on this story: Rebecca Christie in Brussels at rchristie4@bloomberg.net; Boris Groendahl in Vienna at bgroendahl@bloomberg.net.

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

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