At the Economic and Finance Ministers Council held in Brussels on 15 May, Austria and Luxembourg voted against proposals to give the Commission a mandate to start negotiations on the revision of agreements on taxation of savings. Commissioner for Taxation and Customs Algirdas Šemeta said that he was extremely frustrated by Austria and Luxembourg's actions, noting that “tackling tax evasion is a growth-friendly way of boosting national budgets. How can any Member State possibly justify blocking progress in this area?”

The Commission estimates that €1 trillion is lost from public finances due to tax evasion and avoidance and has undertaken a comprehensive review of the measures currently in place. The aim of revising agreements with Switzerland and the other four counties is to ensure that they apply equivalent measures to those envisaged in the revised Savings Directive which includes closing loopholes by covering a wider range of savings products.

In a statement released after the vote, Commissioner Šemeta said “the position that Austria and Luxembourg have taken on this issue is grossly unfair. They are hindering 25 willing Member States from improving tax compliance and finding additional sources of income. They claim that they are protecting their own national interests. This excuse does not stand up. We are only seeking mandates to negotiate at this stage – to explore how much we can achieve with Switzerland and the other countries. Any eventual agreement would have to be adopted unanimously. Austria and Luxembourg have every assurance that nothing will be signed without their full consent”.

The Commission has also expressed concerns about the bilateral agreements that Germany, the UK and Austria have signed with Switzerland. Following discussions between the Commission, the UK and Germany subsequently amended their agreements with Switzerland to remove all areas already covered by EU Savings Tax legislation, as well as making some further technical adjustments, including provisions to pull back from areas that could be covered by EU savings measures in the future. The bilateral agreements still cover areas outside EU competence, such as taxing undeclared past income or determining taxing rights over non-savings income and immovable property. The Commission is still in discussions with Austria in respect of its agreement with Switzerland.

For Commissioner Šemeta's statement, see http://ec.europa.eu/commission_2010-2014/semeta/index_en.htm

For details on the proposal put before the EU 27 ministers see http://ec.europa.eu/taxation_customs/resources/documents/common/whats_new/ecofin_ may_2012_en.pdf