Investing for Survival--More on Tax Havens

      Investing for Survival

More Tax Havens Fall

In April Europe became the latest privacy battleground when five EU countries jointly announced an agreement on tax-information exchange.

Similar to the 2010 U.S. Foreign Account Tax Compliance Act (FATCA), the agreement between France, Germany, Italy, the UK and Spain is being viewed as the basis for a bigger, EU-wide agreement.

Under FATCA, the U.S. Treasury Department is signing intergovernmental agreements with countries worldwide and claims to be negotiating with 75 at time of writing. Since its introduction FATCA has been viewed as a model for other nations eager to track down the foreign accounts of their citizens.

Austria, and the world’s only remaining Grand Duchy, Luxembourg, have also succumbed to the tax transparency moves of the EU.

Until recently, Austria and Luxembourg were the only two countries in the Union that refused to disclose the identity of bank account holders to fellow member states. Both have now agreed that beginning in 2015 they will comply with an EU directive on the automatic exchange of bank depositor information.

Luxembourg’s finance minister, Luc Frieden, said that he wanted to “strengthen cooperation with foreign tax authorities.” Banking secrecy will still apply to Austrian citizens however, which the Austrian government has called a “fundamental right.”