European finance ministers said on Tuesday that they had made progress in plans to crack down on tax evasion. At the same time, the ministers delayed dealing with the most delicate issues related to exchanging details on individuals’ tax matters.
In a statement, the ministers, meeting in Brussels, said that they had agreed to draft rules to facilitate collecting taxes across borders. The rules are intended to make it easier to request information, including that held by banks, and to provide “flexible conditions for requesting assistance, requiring the spontaneous exchange of information.”
The agreement relates largely to value-added tax claims and to providing data on fraudulent insolvencies, according to European Union documents.
It forms just one part of a broader package of tax measures that are being discussed by the European Union as a follow-up to a tax deal in place since 2005, and as members seek to replenish national coffers depleted by the financial crisis. The European Union’s taxation commissioner, Laszlo Kovacs, said at a briefing in Brussels that splitting up the tax package into several elements would make it easier to make progress.
The agreement on Tuesday, which must still be discussed by the European Parliament, will promote solidarity on tax matters, he said.
“We’ve taken an important step forward,” said Elena Salgado, the minister of finance from Spain, which holds the rotating presidency of the European Union. She said that she hoped to see further progress in coming months.
Under the 2005 agreement, known as the savings tax directive, European Union members seek to ensure that the relevant national authorities receive the correct tax owed by their residents, regardless of where their banks are.
Most countries agreed to automatically exchange data on savings held in other member states. But Austria, Belgium and Luxembourg instead impose a withholding tax on the savings of foreign nationals, repatriating that money to the country in which the customer is a resident for tax purposes. This arrangement was supposed to be transitional and last no longer than 2012.
Most countries in the bloc would now like to extend the agreement to cover a broad range of financial products beyond savings accounts, to include trusts, foundations and investment companies outside the European Union. They would also like to establish deadlines for requested information to be provided, and to allow officials from member states to participate in the inquiries of their neighbors.
Most also want the automatic exchange of information to become the norm as soon as possible.
But Austria and Luxembourg argue that their transitional arrangements should be maintained until equivalent measures are applied by Andorra, Liechtenstein, Monaco, San Marino, Switzerland, and 10 dependent and associated territories of the Netherlands and Britain.
Austria and Luxembourg fear losing lucrative business if Switzerland exchanges information only on request, while they do so automatically.
Separately, ministers also said that they would assess more closely Greece’s latest commitments to reduce its ballooning budget deficit at their next meeting, in February. They welcomed the commitment by Athens to improve the functioning of data provision.
Ms. Salgado expressed confidence that Greece would “do all that is necessary” to avoid a default.