WRITTEN QUESTION E-3158/02

by Erik Meijer (GUE/NGL) to the Commission

(5 November 2002)

Subject: Delay in taxation of foreign-owned savings accounts due to indecision as to whether to abolish banking secrecy or to introduce taxation at source

1. Is the EU still negotiating with third countries such as Switzerland and Liechtenstein about the implementation of the decision taken by the Ministers of Finance of the EU Member States in 2001 to exchange information about the balances in the savings accounts of each other's nationals on condition that the third countries relevant to the management of savings had agreed to cooperate by the end of 2002?

2. Can the Commission provide any information about the statement by Commissioner Bolkestein quoted in the Financial Times on 7 October 2002 to the effect that, while EU Member States are insisting on firm agreements with third countries on the taxability of foreign savings by abolishing banking secrecy, they may not themselves be genuinely interested in the successful completion of these negotiations because this would involve abolishing banking secrecy in their own countries?

3. Do the pessimistic expectations referred to in paragraph 2 apply to Luxembourg, Austria and the United Kingdom? Are there any other Member States which may consider that it would not be in their own interests for an agreement to be reached?

4. Which non-EU countries have now agreed to cooperate?

5. If no agreement is reached with third countries though let us hope that one will be will there nonetheless still be agreement on the deduction of tax at source throughout the EU before interest is paid to savers? If so, on what date will this be introduced?

6. How much tax revenue will be forfeited within the EU because the tax deducted at source is likely to be calculated at a lower rate than the normal domestic tax rates?

7. What could be done at the earliest possible date to ensure that residents of EU Member States who keep savings accounts outside their country of residence are no longer rewarded by what in practice comes down to exemption from the requirement to pay tax or a large reduction in the tax they are required to pay?

Source: Dutch newspaper De Volkskrant, 8 October 2002.

Reply given by Mr Bolkestein on behalf of the Commission

(7 January 2003)

On 16 October 2001, the Ecofin Council instructed the Commission to open negotiations with the United States and five other non-member countries (Switzerland, Liechtenstein, Monaco, Andorra and San Maríno) with a view to obtaining adequate undertakings that they would introduce measures equivalent to those which the EU plans to adopt within the Community concerning taxation of income on the savings of non-residents.

These negotiations were launched after the Ecofin Council had unanimously adopted a draft directive on 13 December 2001 which brought together all the provisions on taxation of savings which were to serve as the basis for them.

Since early 2002, in the course of carrying out these negotiations, the Commission has met several times with the representatives of the six third countries concerned. The Commission's objective was to achieve concrete results in time to allow the Council to adopt the Directive on taxation of savings as part of a comprehensive agreement on taxation before the end of 2002.

In the light of this deadline, which was set by the Feira European Council in June 2000, the Commission drew up a report on progress with the negotiations which it adopted on 27 November 2002(1). This report was submitted to the Council, and was also sent to the Parliament for their information. A copy of the report is being sent directly to the honourable member, and another is being sent to the Parliament's Secretariat General.

In the debate which took place during the Ecofin Council meetings of 3 and 11 December 2002, the Member States were able to define more clearly their individual positions regarding the offers of cooperation made by the non-member countries concerned. However, the ministers decided that certain technical aspects deserved further discussion, and agreed to introduce a brief delay into the work programme set out at Feira. The Ecofin meeting of 21 January 2003 was therefore set as the date on which a decision would be made. The Commission is looking forward to the announcement of the results of the discussions which are ongoing within the Ecofin Council; meanwhile, we continue our contacts with the third countries involved to try and clarify their offers further. The Commission is eager to find effective solutions and apply them rapidly, so as to ensure that the internal market can function properly.

(1) SEC(2002) 1287 final.