EU agrees to review tax haven rules

The European Union caved into pressure from Germany yesterday and agreed to consider a clampdown on tax havens – despite opposition from Luxembourg which said it saw no reason to change current laws.

The European Commission is set to begin a lengthy process to expand current laws to prevent its citizens evading tax on the interest accumulated on offshore savings.

EU tax commissioner Laszlo Kovacs yesterday proposed an extension to the scope of the EU's directive on taxation of savings in bank accounts. Kovacs said this would be done by including trusts or foundations to the list of products already covered by existing laws, the International Herald Tribune reported.

Tax havens came under wide scrutiny of authorities in Europe afterGermany cracked down on evaders in Liechtenstein. Germany then lobbied for EU ministers to speed up planned reviews of the tax laws relating to offshore savings.The concern spread abroad, leading authorities in Australia and Germany to carry out audits and raids on their wealthiest residents.

Luxembourg, which defends banking secrecy, underlined its position yesterday. Finance minister Luc Frieden said he saw no loopholes in the current rules. He added that any changes 'would certainly need a lot of time'.

Further reading:

Germany and France urge evasion blacklist review

Swiss unbowed on bank secrecy laws