EU gets down to business to tackle tax evasion

EU finance ministers want to strengthen data exchange on foreign capital investments - preferably on a global scale. But this idea has already been met with resistance in Europe. Still, they have moved a step forward. Pressure on tax evaders in the EU is growing as most member states are heavily in debt. More and more cases of gross tax fraud are being revealed. Even countries like the UK, which had attracted foreign dirty money in the past try to avoid being regarded a safe haven for tax evasion. "At an economic time like this it is right that everyone makes their fair contribution," British Treasury chief George Osborne said upon his arrival in Brussels on Tuesday (14.05.2013). The UK has started to present itself as a leader in the fight against tax evasion. Osborne's view is echoed by his Swedish colleague Anders Borg. "We are losing quite a lot of money due to tax havens and tax evasions, so we are very supportive of any move to strengthen the tax regime," Borg said. Pierre Moscovici and George Osborne (Photo: GEORGES GOBET/AFP/Getty Images) Moscovici and Osborne both called for action to improve the exchange of information According to French Finance Minister Pierre Moscovici there are several reasons for the sudden action. "It's a moral necessity, that's what the public demands for," he said. "It's also a problem of public finances and economic interests." The goal should be to reach the point where information is automatically exchanged, he added. The French government saw Budget Minister Jerome Cahuzac forced to step down weeks ago because of a secret bank account in Singapore. A lucrative banking secrecy The long-term goal is the global exchange all relevant data on capital income. But it's a goal that has proven to be difficult even within the 27-member EU as tax issues require unanimous consent of all member states - allowing a single country to block any action. Since 2005, most EU member states exchange data on interest earned by EU citizens who do not live in their native countries. Austria and Luxembourg, however, do not participate. Both countries maintain strict banking secrecy rules. Instead, they tax foreign deposits at the source and anonymously transfer this to the investors' home countries. And it's going to stay like that, at least in Austria. "Today it's not about the Austrian banking secrecy," Austria's Finance Minister Maria Fekter said. Blick auf die Unterstadt Grund in der luxemburgischen Hauptstadt. Oberhalb der Festungsmauern und der an ihr entlang führenden Promenade Corniche steht das Gebäude der Staatsarchive (l), hinter dem die Türme der Kathedrale in die Höhe ragen. (Aufnahme von 1997). Luxembourg has signalled it might in future cooperate to track down tax fraudsters At the finance ministers' meeting in Brussels, Austria and Luxembourg only agreed to one thing: The EU should start negotiations with five European countries that are not EU members - Switzerland, Liechtenstein, Monaco, Andorra and San Marino - about intensified data exchange. These countries are regarded as safe havens to hide money from tax authorities. But whether Austria and Luxembourg agree to this form of transparency on EU level has yet to be seen. For her part, Fekter worked to shift the subject to another tax issue. She brought up value-added tax fraud in Europe where goods are being repeatedly sold to another country in a procedure that allows the purchaser to claim a value-added tax refund. Fekter said she would have liked to decide on measures to tackle this, but "a few of the big players didn't want this and took it down from the agenda." She didn't name which countries blocked the move. Some see this as a red herring. But if Austria and Luxembourg continue to resist an extensive data exchange within the EU, pressure on them will grow even further. The EU's special summit dedicated to the fight against tax evasion next week will provide enough opportunity to do just that.