The fight against tax havens was added to the agenda of the 22 May EU leadership summit, originally intended to focus on energy issues.
>> Read: EU leaders to square the circle of cheap energy
But European Council President Herman Van Rompuy, who chairs the regular EU summit meetings, added taxation to the agenda after recent media reports exposed the magnitude of tax evasion.
"Every year around €1 trillion is lost in EU member states because of tax evasion and tax avoidance," Van Rompuy said in a message addressed to EU leaders ahead of the summit.
That amount represents the equivalent of the GDP of Spain or about the same as the Union's budget for the next seven years. It is also 100 times more than the bailout recently agreed for Cyprus.
However, the guidelines for the summit conclusions, prepared by Van Rompuy, speak of tax evasion in broader terms, mentioning that only half of the value added tax is collected in the Union. Another issue is “aggressive tax avoidance”, as recently highlighted by US coffee retailer Starbucks which skirts taxes by reporting no or low profits.
Automatic exchange of information
Meanwhile, EU finance ministers pledged greater information-sharing to counter tax evasion.
At a meeting held in Dublin on 12 April, Austria appeared isolated for its continuing refusal to share information on bank deposits. Later, on 27 April, its Chancellor Werner Faymann said that it also seeks to give other EU countries access to foreigners' bank account details, as long as banking secrecy for Austrians is preserved.
In a letter sent to EU leaders on 8 May, European Commission President José Manuel Barroso advocated extending the principle of automatic exchange of information to all forms of income, which includes capital gains, dividends and royalties. At present, the EU directive on taxation of savings only covers interest income.
Buy the draft summit conclusions have little ambition in this regard, calling for the "acceleration of work on further extending scope of automatic exchange of information at EU level, in particular on a broader range of income.”
Germany, France, Britain, Italy, Spain and Poland have called for a European agreement modelled on the US Fair and Accurate Credit Transactions Act, which requires citizens to report financial interest held overseas.
Asked what would be the realistic expectations from the summit with Austria still resisting the automatic exchange of information, Commission spokeswoman Pia Ahrenkilde Hansen said a meeting of finance ministers on 14 May was an intermediary step which might overcome such hurdles.
“We are not yet there, [but] we hope to see significant progress there ahead of the European Council,” she said.
