EU finance ministers to set sights on tax havens

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Germany is expected to lead calls for tighter EU rules on tax havens during a meeting of EU finance ministers this Tuesday (4 March), in the wake of a tax evasion scandal that has spread from Germany across Europe to the US and beyond.

“We are bringing pressure to bear on a European level,” Germany’s Finance Minister Peer Steinbrück told the German newspaper Ruhr Nachrichten on 28 February.

Steinbrück’s comments were made in reference to Liechtenstein, a small mountain principality and tax haven on the border of Switzerland, whose banking sector and royal family have allegedly been helping wealthy Germans evade paying taxes for years. 

Berlin estimates that several hundred million euro have been stashed by Germany’s elite in secret Liechtenstein bank accounts and financial trusts. The scandal exploded two weeks ago and led to the high-profile resignation of Klaus Zumwinkel, the head of Deutsche Post.

Other EU member states including the UK and Spain, as well as countries like the US and Canada, have also launched investigations against citizens suspected of hiding income in Liechtenstein. 

The issue of tax havens is addressed by the 2003 EU Savings Tax Directive, which includes stipulations on information exchange concerning deposits by residents of EU member states in tax havens such as Monaco and Liechtenstein, which maintain strict banking secrecy laws.

But the directive is limited in scope, covering only certain savings accounts and bonds, and contains numerous loopholes.

A German draft text of proposed changes to EU rules calls for an extension of the scope of the directive to cover all forms of financial assets, including capital gains, according to a report by the Financial Times.

Finance ministers will also discuss the issue of sovereign wealth funds (see EURACTIV 28/02/08), continued instability in global financial markets and value added tax (VAT) fraud. Concerns about the euro, which reached a record high against the US dollar last week (29 February), will be discussed during a separate meeting of finance ministers today (3 March).

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