Tax Research UK

There is a very obvious mood for reform of the EU Savings Tax Directive right now. The FT summarised it this morning, saying:

Germany’s call for a clampdown on European tax havens won support on Tuesday from a majority of the European Union’s 27 member states, determined to tighten rules on bank secrecy, which they see as encouraging tax evasion.

At an EU finance ministers’ meeting in Brussels, only Austria and Luxembourg, which obtained special arrangements when an EU savings tax directive came into effect in 2005, appeared reluctant to back tougher rules.

The good news is:

The finance ministers, aware of how seriously Germany takes the matter, have asked the European Commission to accelerate an analysis of how effective the tax rules are and deliver a report by the end of May rather than in October as planned.

The Commission will then be expected to prepare proposals for amending the directive, with a view to closing loopholes that have remained open since 2005.

Best news of all was this:

The UK, whose backing Germany was eager to secure, gave solid support. “I don’t think there is any difference at all between London and Berlin on this one,” one EU diplomat said.

Given that the UK has been a major obstacle to the EU STD in the past, mainly because it made sure companies and trusts remained outside its scope, this is a major breakthrough. The UK government has to be held to account on this. So too do Luxembourg and Austria. As the FT notes:

The most explicit opposition to Germany came from Jean-Claude Juncker, prime minister of Luxembourg, who said there should be no hasty changes.

“I’m looking forward to many years of fascinating and fundamental discussions,” diplomats quoted Mr Juncker as saying.

Austrian officials similarly defended the status quo, saying their country did not practise banking secrecy when it came to criminal matters.

Both are acting to provide state support for their corrupt and failing banking sectors through provision of official state aid in the form of banking secrecy which provides them with unwarranted competitive advantage which cannot be justified under EU competition or access to capital laws.

And I’ve got news for Mr Juncker: he might be looking forward to years of negotiation, but the EU is not. The mood for that does not exist, and I suspect other measures, such as state aid laws on anti-competitive measures might well be used to block down the abusive structures his country uses. For too long such measures have been used to help tax avoiders. The measures or on the other foot now and the mood to fight exists. The days of abuse are numbered.