LONDON – Luxembourg is considering ending its bank secrecy rules by automatically handing over details of bank account holders to other European Union states, its finance minister said on Tuesday.
The European Commission wants all 27 EU member states to strengthen rules on how income on savings held in bank accounts is taxed, including an automatic exchange of information about which account holders receive what interest payments.
Nearly all EU members already have such an exchange under rules known as the EU Savings Directive, but Luxembourg and Austria have so far resisted revealing their details to other countries and instead get banks to withhold tax.
At the weekend, Finance Minister Luc Frieden said Luxembourg was open to more transparency in its financial industry.
Asked at a banking conference on Tuesday organized by ALFI whether Luxembourg would sign up to the automatic data exchange, he said the country's authorities were considering it.
"It has not been decided, it is something that is being discussed in the government," Frieden told Reuters.
Austrian Chancellor Werner Faymann said on Tuesday his country would join Luxembourg for talks with the European Union on how to crack down on cross-border tax cheats, signaling an easing of Vienna's earlier hardline stance on bank secrecy.
Speaking to reporters earlier, he said the country's banks had not been impacted by Cyprus's move to impose levies on deposits and savings as part of its EU/IMF bailout deal.
Asked whether there had been an outflow of deposits since the deal, which will see Cypriot bank account holders lose a large chunk of deposits above 100,000 euros, Frieden replied: "Not at all. To the contrary, we see a lot of people around the world have trust in the Luxembourg financial sector, especially people in Asia."
In his earlier speech, Frieden sought to distance Luxembourg, which like Cyprus has a hugely oversized financial sector compared to the size of its economy, from the problems suffered by the Mediterranean island.
The decision to tax deposits over 100,000 euros in Cyprus has added a new dimension to the euro zone's crisis and has raised fears that rapid bank runs could occur if problems emerge elsewhere.
"Luxembourg is strong and quite different to a country such as Cyprus," Frieden said, citing the largely international ownership of banks and investment fund firms operating there.
(Additional reporting by John O'Donnell in Brussels; Editing by John Stonestreet)