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February 9, 2004
Impasse in EU talks with tax havens
By Raphael Minder and Andrew Parker
The European Union remains locked in talks with four European tax havens about sharing information on savings, ahead of a June deadline to endorse new legislation.
Frits Bolkestein, the EU's
commissioner for the single market, is expected to tell EU finance ministers tomorrow that insufficient progress has been made in recent negotiations with Liechtenstein, Andorra, San Marino and Monaco to reach a
deal on sharing information and introducing withholding taxes.
"It's a case of nobody wanting to make the first move," an EU official said.
The legislation, the EU savings tax directive, was
agreed last year by EU ministers with the proviso it would only come into force in 2005 if other financial centres promised to adopt the rules by the end of June 2004.
Countries such as Luxembourg are
concerned that EU financial centres could lose out if non-EU rivals ignored the legislation, which is designed to help the fight against tax evaders.
The stalemate comes after the UK's position on the EU
savings tax directive was bolstered by a conditional commitment last week from the Cayman Islands to comply with its terms.
However, the EU official said Mr Bolkestein was optimistic that differences would be
resolved ahead of the June deadline. Prince Nikolaus of Liechtenstein also told Reuters last week: "Things have much advanced."
The Caymans, a leading tax haven, had been the only UK dependent
territory holding out against the directive because of fears its financial services industry would be damaged. Other UK territories with offshore financial industries, notably Guernsey, Jersey and the Isle of Man,
made commitments to comply last year.
However, the UK territories have also made it clear they want to ensure all rival offshore centres due to participate in the directive comply with it at the same time.
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