Luxembourg will begin the automatic exchange of tax data in 2015, easing its bank-secrecy rules as part of efforts to fight the financial crisis.
Luxembourg will change its rules to coordinate with policy in the U.S. and 25 of the EU’s 27 member nations, Prime Minister Jean-Claude Juncker told his nation’s parliament today. Luxembourg and Austria have been holdouts in the EU’s efforts to coordinate savings taxes and hold talks with non-EU countries.
“We can now participate as of Jan. 1, 2015, because our financial sector has been preparing in the knowledge of this international development,” Juncker said. He said the move would ensure that Luxembourg could work with U.S. standards and aid global efforts to crack down on tax evasion.
“Luckily, our financial sector has subscribed to a resolute white money strategy,” Juncker said. “Our financial sector doesn’t live off black money and tax evasion.”
The tax-data decision took on a “certain acuteness” after Cypriot bailout talks roiled financial markets, the Luxembourg Finance Ministry said in a statement. Luxembourg had been preparing changes to its regulations for several months prior to today’s announcement, the ministry said.
Luxembourg and Austria last year vetoed negotiations over the extension of a savings-tax agreement because of concerns that they would be forced to give up banking-secrecy measures that attract foreign depositors. The two countries blocked the European Union from starting talks on updating the seven-year-old tax accord with Switzerland, Liechtenstein, Monaco, Andorra and San Marino.
“This means that Austria is the last member state not to be applying the automatic exchange of information,” Emer Traynor, spokeswoman for EU Taxation Commissioner Algirdas Semeta, said today in Brussels. “We understand that there are discussions ongoing in Austria at this moment on this issue and we hope that they will be able to follow Luxembourg’s lead.”
The Austrian government said yesterday that it may revise its laws shielding information about foreign account holders. EU finance ministers will discuss the savings-tax accord when they meet in Dublin later this week.
Under a 2005 accord, Austria and Luxembourg withhold tax on interest income paid to depositors from other EU states while protecting their identities. Other EU states transfer the income data to the depositor’s home tax authority.