Austrian Secrecy for Foreign Account Holders May Be Scrapped

Austrian laws shielding information about foreign account holders may be revised, the government said today after the Alpine republic was criticized by the European Union for holding up legislation to stop tax fraud.

Austria will join Luxembourg in talks over an automatic exchange of information about non-resident accounts, Social Democratic Chancellor Werner Faymann told reporters in Vienna today. The two countries previously vetoed EU attempts to harmonize taxes on savings, citing concerns it would undermine depositor protection.

“We have previously had a system which was slightly stronger than Luxembourg but it’s too little in the continued fight against fraud,” Faymann said after meeting with his cabinet. “We are ready to discuss and negotiate the exchange of data.”

The Austrian government’s turnaround on bank secrecy takes place during an election year. Austria’s conservative People’s Party, led by Vice Chancellor Michael Spindelegger, has opposed greater transparency. The nation of 8.5 million people is due to hold national elections by Sept. 29.

“We have bank secrecy, anchored in the constitution, that we support and do not want to touch,” Finance Minister Maria Fekter said before the government met. The country would have to check whether secrecy for foreigners could be lifted “on a non-discriminatory basis,” she said.

Speaking at a press conference with Faymann, Spindelegger said “Austria is not a tax haven” and that it was important to prevent tax evasion. His party will support negotiations to lift secrecy, he said.

Luxembourg’s Finance Minister Luc Frieden said April 6 that Duchy is loosening its opposition against EU savings-tax proposals. International trends are moving toward an “automatic exchange of information,” he told Frankfurter Allgemeine Zeitung in an interview.

Austria will find itself “in a lonely and quite unsustainable position” if it continues to resist this inevitable progress toward greater transparency, EU Tax Commissioner Algirdas Semeta said yesterday.

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