Austrian Banks Face French Backlash Over Opaque Accounts

Austrian banks risk a backlash unless the Alpine republic cooperates with a European Union initiative to fight tax fraud by sharing account information with other bloc members, France’s budget minister said.

“It’s not normal that countries like Austria don’t pass on information about EU citizens who hold accounts there,” French minister Bernard Cazeneuve said in an interview broadcast today on France Info radio. The country “risks being listed as a non-cooperative nation,” he said.

The warning is the latest round of criticism directed at Austria from within the EU. The nation of 8.5 million people will find itself isolated if it continues to resist EU moves toward greater transparency, EU Tax Commissioner Algirdas Semeta said earlier this week. The bloc has called on states to develop conditions under which nations may be black listed.

Austria is ready for talks with the EU and the U.S. on data sharing, “but these negotiations can’t be a one-way street,” Finance Minister Maria Fekter said today. Transparency should also be expected from authorities in the U.K. and U.S. where rules of incorporation also enable tax evasion and money laundering, she said.

Austria will join Luxembourg in talks over an automatic exchange of data about non-resident accounts, Social Democratic Chancellor Werner Faymann said this week. While Luxembourg’s Prime Minister Jean-Claude Juncker said the country will start exchanging information in 2015, Austria hasn’t given a date. The two countries have previously vetoed attempts to harmonize taxes on savings.

The discussion about bank secrecy in Austria takes place in an election year. The conservative People’s Party opposes an automatic exchange of all data, saying it wants to protect the privacy of small depositors. The party has called for a legal review over whether information on foreign account holders can be exchanged.

Foreign deposits in Austria from within the euro area amounted to about 36 billion euros or a little more than a 1/10 of all deposits, according to the latest Central Bank data.