Double whammy for tax deal

Date: 05/12/02

EU MINISTERS clashed this week over attempts to reach an accord that would stop EU citizens saving in foreign banks to escape taxation.

In a further blow to efforts to reform taxation policy, Germany blocked a plan to set tax rates for a wide range of energy products that up to now have been set at national level.

Luxembourg, Austria and Belgium rejected a deal struck by the European Commission with Switzerland to combat tax evasion by EU savers. They said the Swiss had not done enough to let member states find and tax undeclared EU deposits in Geneva and Zurich, once the law comes into force.

The trio will not ratify the directive clamping down on tax evasion inside the Union unless the Swiss and other countries pledge 'equivalent' measures. 'We want to tax income from savings correctly but we don't want to tax it in a way that results in money escaping from the EU,' said Luxembourg Prime Minister Jean-Claude Juncker. The UK had earlier withdrawn its opposition to the Swiss deal.

Switzerland has promised to remain open to negotiations with the Commission on 11 December, three weeks before the EU's deadline for a deal. On the energy tax, Germany refused to agree to a request from France and Italy to maintain reduced tax rates for diesel used by hauliers as part of a compromise by the Danish presidency.

EU ministers have clashed over attempts to reach an accord that would stop EU citizens saving in foreign banks to escape taxation.