EU tackles tax evasion

EU ministers are keen to see a uniform tax

By Patrick Bartlett Europe business correspondent

EU finance ministers meeting in Brussels are hoping to break years of deadlock over plans for a Europe-wide clampdown on tax evasion.

Under a proposed deal, 12 EU member states would exchange information about bank accounts held abroad by each others' citizens.

Switzerland has been reluctant to alter banking secrecy laws

Switzerland and other financial centres that operate strict banking secrecy laws, could opt instead to impose a special tax on bank accounts held by EU residents.

Until now it has proved extremely difficult for tax authorities in one EU country to discover undeclared income from savings held by one of their citizens in another.

The agreement will also cover dependent territories, such as the Channel Islands.

The breakthrough in the negotiations follows a deal with non-EU member Switzerland, which has the world's biggest offshore banking industry.

Luxembourg stalls

After intense pressure, Switzerland has offered to tax all Swiss bank accounts held by EU savers.

The revenue raised would be passed on to EU governments.

Although that falls far short of the lifting of banking secrecy the union had demanded, ministers now accept it is the best deal on offer.

A final agreement depends on Luxembourg, Austria and Belgium, which also have strict banking secrecy laws.

They must agree to do the same as Switzerland but Luxembourg objects to the proposed level of the tax.

Under existing plans, the rate would rise progressively to 35%. Britain says anything less would be hard to accept.