European Union (EU) finance ministers have granted themselves new powers to collect and share bank account information including account balances, interest and dividend payments with tax authorities in other countries by 2017.
The news comes after Luxembourg and Austria, who had been holding out against the deal, backed down. The deal prompted the EU’s tax commissioner Algirdas Semeta to victoriously declare “bank secrecy is dead.”
The deal extends an existing EU law, the Administrative Cooperation Directive, which commits member states to sharing information such as income from employment, directors fees and life insurance – meaning that the European superstate will now know more than ever about the citizens living within the borders of its member countries, including the United Kingdom.
Italian finance minister Pier Carlo Padoan, who chaired the meeting, told the assembled delegates that the agreement is a “milestone for what the EU does for its own progress, but also for the international fight against tax evasion.”
Commissioner Semeda commented that the law “promises full and lasting tax transparency in Europe,” declaring “Bank secrecy is dead,” as EU countries “will fully cooperate in throwing open the traditional hiding places of tax evaders.”
Both Luxembourg and Austria have previously defended banking secrecy as both are concerned about losing ground to banking rivals such as Switzerland and Liechtenstein.
But in March this year the two countries agreed to put in place the new powers after the EU promised to force Switzerland and four other countries with tough bank secrecy laws to sign a similar deal by the end of 2014, committing them to making it easier for foreign governments to find and tax hidden funds.
Both Luxembourg and Austria were previously insisting that more time was needed to implement the agreement.
During Tuesday’s meeting, Luxembourg’s finance minister Pierre Gramegna told his counterparts that Luxembourg was now ready to take part in the information sharing process, saying: “The EU should be a flag-bearer in this initiative. Luxembourg should be committed to the automatic exchange of information.”
His country is still coming under huge amounts of pressure over its corporate friendly tax policies, with the European Commission undertaking investigations into whether Fiat and Amazon were awarded preferential treatment.
The agreement forced Austria to back down and accede to the demands, although they have negotiated an extra year in which to build the technical infrastructure required. Hans-Jörg Schelling, Austria’s finance minister told the meeting “My problem in this respect is technical … In Austria there is no data connection between the banking sector and the administration,” adding “We have to build a new system from scratch, and that takes time.”
The European Commission estimates that tax evasion and fraud costs member states about €1trillion ($1.26trillion) a year, arguing that the states need that money to reduce the requirement to cut spending.
It’s an argument not supported by Camilla Goodwin, a spokesman for the Institute of Economic Affairs, who told Breitbart London: “These measures further undermine a long tradition of privacy in banking and could make it easier for government agencies to arbitrarily seize people’s assets.
“Trust in banks is already low and a policy of this kind will prove counterproductive as individuals will be encouraged to save elsewhere. Ultimately, this could lead to reduced investment and make clamping down on tax evasion more difficult if assets are kept outside the banking system.”