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2 December 2008
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Feira tax deal in jeopardy? 

Published: Tuesday 4 December 2001   

The deal on the tax package reached at the Feira Council in 2000 might be in danger when EU ministers meet on 4 December to discuss the draft savings tax Directive. Three countries (Austria, Belgium and Luxemburg) might block progress on this issue because no "similar measures" are taken by third-countries.

Background:


The arrangement on savings tax forms part of the "tax package", which consists of three elements: tax on savings, taxation of interests and fees paid between associated companies and a code of conduct for business taxation. At the Feira summit it had been agreed to link the adoption of the tax package to the conclusion of negotiations with certain third countries (Switzerland, Liechtenstein, Monaco, Andorra, San Marino and the United States). These negotiations should lead to "similar measures" as the EU on a tax package by these third countries to prevent a "capitals drain" to "tax havens". Tax decisions require unanimity by EU countries.

 

Other related news:

Positions:


Austria, Belgium (current President of the EU Council) and Luxemburg are said to block any possible agreement on the draft savings tax Directive if similar measures are not taken in third countries, especially in Switzerland. The latter country, however, has repeatedly stated it is not willing to change its banking secrecy rules. Austria, Belgium and Luxembourg argue that if indeed similar measures are not taken in third countries, they will be in a disadvantaged position vis-a-vis countries regarded as tax havens.

The draft Directive, expected to be transposed into national legislation by 2004, already contains special transitional periods for Austria, Belgium and Luxembourg.

 

Next steps:

  • If the Council indeed cannot come to an agreement, it might be added to the ECOFIN agenda of 13 December or the Laeken agenda of 14-15 December
  • June 2002:conclusion of negotiations with third countries
  • Second semester 2002: assessment of "equivalent measures" of third countries
  • Second semester 2002: after favourable opinion of European Parliament and Economic and Social Committee: adoption of savings tax directive; conclusion of agreements with third countries.

 

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