Luxembourg warns off EU ‘bully's’

By added on 19/01/2010

A report in EUBusiness says Luxembourg's Finance Minister Luc Frieden warned on Tuesday that European Union partners are wasting their time trying to bully him into an agreement on fighting tax fraud.

"I believe this debate is going nowhere," said Frieden, whose country, along with Austria, is resisting pressure to open up its culture of banking secrecy at a time of desperately short public finances elsewhere.

Finance ministers from the 27 EU nations are meeting in Brussels seeking the automatic exchange of account information between member states and third-party jurisdictions, some of which are territories dependent on member states Britain and the Netherlands.

The long-running issue has acquired renewed political vigour as recession has wreaked havoc with governments' tax takes and attempts to recover every last penny available to shore up treasury finances are pursued across the board.

However, amendments to EU laws on the taxation of savings interest, on cooperation between tax administrations and on tax recovery, as well as anti-fraud agreements with non-EU neighbours Andorra, Liectenstein, Monaco, San Marino and Switzerland, remain firmly stalled.

The EU's current Spanish presidency wants to put pressure on renegades Austria and Switzerland, pressure which some countries such as Britain say will eventually become unbearable in the context of G20 moves to close tax loopholes around the globe.

But Frieden is clearly in no hurry to budge, adding: "The debate is extremely limited, to my mind."

Arguing he wants a "level playing field" with G20 nations on information exchange, and not simply an opening up of its books to larger rivals with more political clout, he said the issue needs "an objective, serene debate on several aspects of taxation.

"All of that must be discussed, unless we want to see to see financial activity moved to Asia," he stressed.