EU plans to remove banking secrecy to crackdown on tax evasion

European Union leaders have agreed to crack down on tax evasion more effectively by abolishing their banking secrecy and by improving the exchange of information on account holders among themselves and with non-EU countries.
The heads of state and government of the 27-nation EU, at a one-day summit in Brussels yesterday, decided to curb corporate tax avoidance by plugging the legal loopholes, which made it easier for multinational companies to evade taxes legally and to narrow down the sharp differences in the corporate tax levels among the member nations.
The breakthrough after several years of negotiations on a common strategy in the fight against tax evasion and avoidance came after Austria and Luxembourg, two remaining tax havens in the EU, gave up their stiff opposition to an automatic exchange of bank data.

However, they made it clear that their nod for a final deal, expected by the end of this year, would depend on the outcome of negotiations with countries such as Switzerland and Lichtenstein on their participation.
"We have not given our final approval to abolish banking secrecy and to join the automatic exchange of data because we are waiting for the outcome of the negotiations with third countries such as Switzerland," Luxembourg's Prime Minister Jean-Claude Juncker said after the meeting.
"When these results are available, we will take a speedy decision," he told journalists.

Austria's Chancellor Werner Faymann expressed optimism that a final agreement on an automatic exchange of bank data among all members of the EU could be possible by the end of this year. "Today is a bad day for tax evaders because we will take action against them jointly," he said.

German Chancellor Angela Merkel hailed the outcome of the summit as a major breakthrough in the fight against tax evasion and legal tax avoidance.
Some member nations have now agreed to join an automatic exchange of data and this cleared the way for negotiations with non-EU countries, she said.
EU governments in the future will make sure that companies will pay more corporate tax in the nations where they are located, she said.
The chancellor added that the need for plugging the legal loopholes, which enable companies to evade taxes.
President of the European Council Herman Van Rompuy said the summit managed to "break a number of frozen files" and achieved significant progress towards combating tax evasion and tax fraud. The leaders expressed their resolve to reach a final deal on automatic exchange of bank data by the end of this year.

They also agreed to complete as soon as possible negotiations with five non-EU nations, including Switzerland, on their participation, he said in a statement. The EU is estimated to lose around 1 trillion euros (USD 1.3 trillion) annually through tax evasion and avoidance.