EU savings tax deal agreed as Luxembourg, Austria drop opposition

European Union (EU) member states have finally reached a major new agreement on the sharing of tax information related to individuals. The tax transparency changes were confirmed after six years of talks as Luxembourg and Austria, the two nations blocking the reforms, withdrew their opposition.

It means that from 2016, more information will be automatically exchanged by tax authorities in the member states in relation to savings accounts.

“All member states are firmly on board. More than ever we will play a strong hand internationally - to close down loopholes, to promote automatic information exchange, to bring in more transparency,” said Herman Van Rompuy, the European Council's president, after the deal was reached.

Luxembourg and Austria had blocked the moves amid fears that their financial services sectors could lose out to less transparent neighbours, such as Lichtenstein and Switzerland. To assuage their concerns, the European Commission has pushed for improved tax sharing arrangements with Switzerland, Lichtenstein, Andorra, San Marino and Monaco. It seems these talks have progressed enough to satisfy the worries of Austria and Luxembourg.

EU tax commissioner Algirdas Semeta told member states in a letter before the meeting that “great progress has been made” on improving tax sharing agreements with these five low-tax jurisdictions.

According to Bloomberg, he said: “Our interlocutors have accepted that we must all now focus on automatic exchange of information and that the global push in this direction will provide an answer to concerns about the level playing fields.”

Following the EU deal, Mr Semeta praised Luxembourg and Austria for removing their opposition, noting that the agreement has “enormous national significance for them”. The two countries were “particularly encouraged” by the report on the progress the EU is making in negotiations for stronger tax agreements with its closest neighbours, he added.

“Switzerland and the four other countries now accept that the automatic exchange of information must be at the core of their relations with the EU in taxation,” explained Mr Semeta.