November 18, 2017

Austria Defends Banking Secrecy Rules

DUBLIN — Austria will not knuckle under to pressure to follow Luxembourg in dropping its banking secrecy rules, Finance Minister Maria Fekter said Friday, as she sought to portray Britain as one of the European Union’s biggest tax havens.

“Great Britain has many money laundering centers and tax havens in its immediate legal remit,” Ms. Fekter said, pointing to the Channel Islands, Gibraltar, the Cayman Islands and the British Virgin Islands. Those offshore financial centers are under effective British control, though all but Gibraltar remain technically outside of the European Union.

In a move that could raise pressure on Austria, Herman Van Rompuy, the president of the European Council, said Friday that the Union’s 27 leaders would discuss the issue at a summit meeting next month.

“The current economic crisis only helps to stress the urgent need for fair and effective tax systems,” Mr. Van Rompuy said in a statement broadcast over the Internet.

In an opinion piece Thursday in Kurier, an Austrian newspaper, Ms. Fekter called on the European Union to demand the same openness in financial matters of Britain as it had of Cyprus as a condition for the latter’s bailout.

Ms. Fekter spoke in Dublin on Friday as euro zone finance ministers were beginning two days of meetings in which the subject of combating tax evasion was to be on the agenda. The European tax commissioner, Algirdas Semeta, has said that tax evasion costs European nations about €1 trillion, or $1.3 trillion, in lost revenue each year, and cash-strapped governments are eager to track down their citizens’ hidden assets.

Austria had been sending mixed messages on the topic, with Chancellor Werner Faymann suggesting recently that talks were possible. But Ms. Fekter was adamant on Friday, saying: “Austria is sticking to bank secrecy.”

On Wednesday, Luxembourg bowed to pressure from its European partners in the wake of the collapse of Cyprus’s financial sector and from the United States, which is demanding client data under the Foreign Account Tax Compliance Act, and said it would start sharing banking information with other nations in 2015.

Luxembourg’s change of heart left Austria as the only E.U. member state to not share foreign clients’ data with their home governments. Austria transfers to foreign account holders’ home governments the proceeds of a 35 percent withholding tax on interest income earned in Austrian banks, but it does not disclose the clients’ identities.

“We fight tax evasion and money laundering,” Ms. Fekter said, but added, the “automatic exchange of information involves a massive interference in people’s privacy rights.”

The issue of tax havens has come to the fore in Europe since the release this month by the Washington-based International Consortium of Investigative Journalists of data on thousands of offshore bank accounts and shell companies, and a scandal in France over Jérôme Cahuzac, the former budget minister, who quit after admitting to having foreign holdings that he had previously denied.

Article source: http://www.nytimes.com/2013/04/13/business/global/austria-defends-banking-secrecy-rules.html?partner=rss&emc=rss

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