It has emerged that Austria and Luxembourg have vetoed a draft anti-fraud agreement
between the European Union (EU) and Liechtenstein.
During a recent meeting of EU finance ministers, the governments of Austria
and Luxembourg decided to veto the proposed multilateral agreement with Liechtenstein,
fearing negative repercussions for their own financial centers as a direct result of
the deal.
Both countries also blocked negotiations over similar anti-fraud agreements
between the EU and other third countries, including Switzerland, Monaco, Andorra
and San Marino.
Austria’s Finance Minister, Josef Pröll, fiercely criticized the proposed
EU agreement with Liechtenstein, claiming that it did not guarantee full transparency.
According to Pröll, the agreement omits regulations pertaining to the exchange
of information on anonymous investment vehicles, thereby providing Liechtenstein
with a significant advantage.
Luxembourg’s Finance Minister, Luc Frieden, expressed his concerns that
Luxembourg’s own tax policy would have to be modified in the light of
the draft agreement.
Over the past year, Austria, Luxembourg and Belgium have endeavored to maintain
a degree of traditional banking secrecy, while at the same
time bowing to outside pressure, and complying with the OECD standard on international
cooperation in tax matters. However, far from agreeing to an automatic exchange of information, these countries stipulated that information exchange on foreign investors
would only take place upon specific request.
Under the terms of the EU Savings Directive, however, Austria, Luxembourg and
Belgium are to renounce these special rules once tax loopholes in other countries
are finally closed (i.e. once Liechtenstein, Switzerland, San Marino, Monaco
and Andorra, along with US States such as Delaware, agree to comply fully with
the OECD standard).
Arguably, however, the OECD standard only requires countries to exchange information
upon request. Consequently, Luxembourg has expressed its concerns that the proposed
agreements may create two systems.
The European Council has noted the political reservations expressed by Austria
and Luxembourg, and has announced its decision to review the matter in December.
The draft anti-fraud agreement with Liechtenstein covers fraud as relates to
both direct and indirect taxation. It provides for a definition of fraud that
covers both natural and legal persons (companies) and includes not just false
documents and false tax returns, but also the submission of incomplete tax returns.
The text covers administrative cooperation in tax matters requiring the exchange
of information that is foreseeably relevant to tax administrations. It allows parties to trigger
administrative assistance that cannot be refused on the sole ground that the
information requested is held by a bank or anonymous investment vehicle, and
judicial assistance for acts that are punishable under the laws of the parties.
LAWANDTAX-NEWS.COM
