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Top EU states launch project to clamp down on tax-dodgers

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(Globalpost/GlobalPost)

The EU's five biggest economies on Tuesday announced a pilot project to exchange more information between them in a move to clamp down on secret bank accounts held abroad.

In a letter to the European Commission, Britain France, Germany, Italy and Spain said they had agreed to work on setting up a multilateral exchange facility which "will not only help in catching and deterring tax evaders but it will also provide a template as to the wider multilateral agreement we hope to see in due course."

It also encouraged other European Union members to join the project.

The facility is inspired by the Foreign Account Tax Compliance Act set up in the US in 2010 which requires all Americans to declare their overseas accounts. The law also requires foreign banks and financial institutions to report the balances, receipts and withdrawals of American account holders to US tax authorities.

The letter to the EU, of which AFP obtained a copy, also stated that the countries "look forward to discussing how progress can be made within Europe on improving tax information exchange between all member states," and urged for progress on a 2011 directive that "provides for mandatory exchange of information".

EU Tax Commissioner Algirdas Semeta welcomed the move, saying that "automatic exchange of information, which has been the long-time EU standard, is the only way forward. The recent evolution of the US approach further confirms this."

"I can only support any effort to speed up expanding the scope of automatic exchange and of pushing our standard globally."

Austria and Luxembourg are the only EU members that do not participate in an automatic exchange of information on EU residents who have bank accounts in their countries. Luxembourg announced over the weekend however that it was prepared to lift the controversial measure, while Austria has only gone as far as to say that it is prepared to discuss it.

The French government descended into a crisis after the country's former budget minister and tax tsar, Jerome Cahuzac, recently admitted to having stashed away hundreds of thousands of euros in a secret bank account abroad for about two decades.

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http://www.globalpost.com/dispatch/news/afp/130409/top-eu-states-launch-project-clamp-down-tax-dodgers