Update: new details about how the EC sees the EUSTD meshing with other initiatives.
We recently wrote that there were positive signs that the all-important Amendments to the European Union Savings Tax Directive was likely to be approved, in the face of long-standing intransigence by Luxembourg, Austria (and, outside the EU, Switzerland.)
Well, as the Financial Times reported on Friday:
“Luxembourg and Austria lifted their longstanding veto on a key EU law that will extensively bolster national governments’ ability to crackdown on tax cheats.”
This is very good news. As EU tax boss Algirdas Semeta notes:
“It is politically symbolic. An important anti-evasion file has been unblocked, after years of deadlock. This is proof of the widespread acceptance that the days of bank secrecy and tax intransparency are over.”
The existing EUSTD is full of holes, but the Amendments contain many powerful and innovative measures to crack down on the main ones. It will greatly expand the range of income that is to be taxed, and will make it much harder for people to use slippery structures such as discretionary trusts to escape.
The reforms have been blocked for six years, and the FT describes this as a “wrench” and a “huge shift in mentality” for Austria and Luxembourg to lift their veto. This is part of a sea change that has been transforming tax havens’ attitudes towards criminal and tax behaviour in recent years.
So how will the EUSTD mesh with other initiatives out there, such as the OECD’s proposed Common Reporting Standards? Well, the European Commission said:
“our approach is fully consistent with the global one. The two should blend seamlessly together, thereby avoiding disruptions for our businesses.”
In other words, the proposed OECD standard, in the EC’s view, will complement but not replace the EUSTD.
“We have made immense progress, and today is another milestone.
But it is not the last one.
For example, I expect swift agreement on the Administrative Cooperation Directive to cement the widest scope of automatic exchange between our Member States. It is another crucial instrument for the widest possible tax transparency in Europe.”