EU Tackles Tax Evasion as Luxembourg Resists Speedy Pact

EU leaders vowed to investigate “aggressive” tax planning as Luxembourg continued to object to speedy action on an updated information-sharing accord.

At a one-day summit in Brussels, the 27-nation bloc sought to find common ground on hunting down tax dodgers and collecting revenue to offset the recession. At the same time, they hedged their bets on a long-delayed update to the EU’s savings tax accord, which governs how nations share data on earnings from cross-border accounts.

Prime Minister Jean-Claude Juncker said Luxembourg was “under pressure” to allow the EU to move ahead. At the same time, he signaled that his nation won’t go beyond its recent pledge to ease some of its bank secrecy rules in 2015, preferring to delay the tax pact until after deals are sealed with Switzerland and four other countries.

When asked after the summit if Luxembourg was slowing things down, Juncker quipped: “We are neither British nor Swiss.” On his way into the summit, he had told reporters that his nation has “a greater problem” than nations with smaller financial sectors and must make sure all nations face the same conditions.

German Chancellor Angela Merkel said talks with Switzerland won’t hold up the EU’s decision-making.

Struggling Economy

“We haven’t established any conditionality,” Merkel told reporters after the summit. Non-EU countries will be “involved as far as possible. It’s not a matter of us going only so far as the other countries -- that wasn’t today’s message.”

EU leaders gathered to discuss taxes and energy markets against the backdrop of a struggling economy and lingering debt crisis. Conclusions for the meeting sought to acknowledge the EU’s many efforts to improve conditions in both areas.

“Negotiations will begin as soon as possible” on tax deals with Switzerland, Liechtenstein, Andorra, San Marino and Monaco now that finance ministers have signed off on a negotiating mandate, the summit conclusions said. “In light of this, and noting the consensus on the scope of the revised directive on the taxation of savings income, the European Council called for its adoption before the end of the year.”

EU President Herman Van Rompuy said the meeting focused on tracking down tax dodgers rather than standardizing tax rates.

“We are not talking about tax harmonization, but about jointly fighting despicable practices like deliberate tax evasion,” Van Rompuy said.

‘Special Deals’

The tax talks sidestepped international controversy on whether big companies like Apple Inc. and Google Inc. are taking excessive advantage of cross-border tax loopholes. Irish Prime Minister Enda Kenny said his nation, under scrutiny because of Apple’s affiliates there, has fair tax laws and is a full participant in international efforts to combat tax avoidance.

“We do not do special deals with any individual companies,” Kenny told reporters. “The European Commission has not been in touch with me about Apple or about any other individual company.”

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