The European Union moved closer to agreement on a coordinated clampdown on tax evasion as a total of nine countries backed an initiative for automatic sharing of bank details across borders.
The bloc’s six biggest nations won support from the Netherlands, Belgium and Romania for their proposal to adopt the U.S.’s FATCA information-exchange program, EU Tax Commissioner Algirdas Semeta said in Dublin yesterday. Semeta also said the 27-nation EU is closing in on updates to a savings tax accord as holdouts Luxembourg and Austria show willingness to compromise.
“I see a clear window of opportunity,” Semeta told journalists on the long-delayed measure requiring nations to exchange information on savings income across borders. “Considering the strong political will, I think we’ll be able to manage” an agreement on it by next month, he said.
Governments from the U.K. to Poland are eyeing what the commission estimates is 1 trillion euros ($1.3 trillion) of lost tax revenue as many European nations struggle to narrow budget deficits. Politics is also spurring the initiative, notably in France, where President Francois Hollande’s popularity has slumped after his budget minister resigned and admitted having an offshore bank account following months of denials.
No Place to Hide
The message to anyone avoiding taxes is that “the places you can hide are getting smaller and smaller and fewer and fewer,” U.K. Chancellor of the Exchequer George Osborne said at a joint press conference with his counterparts from Germany, France, Italy, Spain and Poland. That followed a meeting of EU finance ministers in the Irish capital.
Luxembourg, one of the countries that previously resisted giving up its banking secrecy rules, dropped its opposition April 10, though Finance Minister Luc Frieden said yesterday that he wants Europe to win broader global support for the initiative within the Group of 20 nations.
“We will play a very constructive part in this,” Frieden said in an interview. Yet we need to “ensure a level playing field. Our partners in the G-20 must make sure that the new trend we see, the automatic exchange of information, will become the global standard. Otherwise, we risk the delocalization of capital out of Europe.”
The position of Austria, the other EU nation that has defended banking secrecy, may also be shifting.
Austrian Finance Minister Maria Fekter lashed out in front of reporters at the U.K. for harboring “money-laundering paradises” and said the U.S. needs to reciprocate any European initiative by handing over information from the “tax havens” of Delaware and Nevada. Still, she didn’t voice opposition to plans in the meeting, Semeta said.
“Austria is seriously considering the way ahead,” he said. “She didn’t say anything against the proposals, and I consider that progress.”
Semeta said the European Commission has years of technical work ready to service the “surge” in political interest in the sharing of bank information across borders. While a European system may not replicate the U.S.’s FATCA system exactly, it can probably be made compatible, he said.
The commission will bring a plan for EU finance ministers to consider May 14. If approved, it can then be considered by the bloc’s leaders at a Brussels summit on May 22.
“The tools are already on the table waiting to be seized,” Semeta said. This is “about fairness and EU solidarity.”