Luxembourg wants equal treatment for financial centres
Luxembourg wants equal treatment for financial centres
"There must be consistency with political decisions recently taken, notably the decisions of the G20 and the European Council. The smooth functioning of the internal market should not be forgotten and we must ensure there is a level playing field for the principal financial centres.” With these words, Luxembourg Finance Minister Luc Frieden explained the opposition of the Grand Duchy to an anti-fraud agreement between the European Union and the Principality of Liechtenstein and to a mandate for the European Commission to negotiate similar accords with other third party countries.
Following the meeting in Luxembourg on 20 October 2009 of the EU Economic and Financial Affairs Council (ECOFIN), which brings together the finance and/or economy ministers of the 27 Member States, Frieden pointed out that the decisions of the G20 and the European Council only covered the exchange of information on demand, but that the draft anti-fraud agreement between the EU and Liechtenstein, and potentially with other third party states, would force the three countries that practice a withholding tax on savings income, that is Austria, Belgium and Luxembourg, to adopt the automatic exchange of information.
With regard to the smooth functioning of the internal market, Luc Frieden declared himself ready to improve the means for fighting fiscal fraud and to improve the Savings Directive. “This directive is being renegotiated and we consider it appropriate to await the end of these negotiations, notably in the areas of application of the directive, applicable tax rates and its effect on other countries, before taking a position here. Hence we cannot agree to the piecemeal tactic that has been proposed today. We are open to constructive discussions but we want to see the whole package.”
The same rules for everybody
In the context of the « level playing field », Luc Frieden considered that “the question must be asked within the European Union whether it is useful and positive for EU financial centres to apply an exchange of information on demand outside the European Union and an automatic exchange of information within. Evidently, you could say, yes, the European Union is a zone where rules differ from those applied outside, but given the volatility of capital and the free circulation of capital, we must take care that these rules do not work to the detriment of financial centres within the European Union. This was the logic behind the accords at Feira which stated that we need to have the same rules for all major financial centres.”
Luc Frieden concluded: “Today, together with Austria, we could not approve the proposals. In our view it is necessary to hold a broader discussion on the taxation of savings in the coming months and we must identify which international rules should be applied .(…). We are not blocking the situation but we want to push for discussions where all aspects are taken into consideration.”
Source: SIP / photo credit: c 2009 SIP/Luc Deflorenne, all rights reserved