Luxembourg Agrees to End Bank Secrecy Rules by 2017
Global Efforts to Combat Tax Evasion Gain Momentum
In a major breakthrough for global efforts to combat tax evasion, Luxembourg has agreed to scrap its bank secrecy rules from 2017. This decision comes after years of pressure from Germany and the United States, as well as other major developed economies.
A Significant Victory for the Campaign Against Tax Evasion
Luxembourg’s Finance Minister Pierre Gramegna announced that his country will adopt an international standard for the automatic exchange of bank data, effectively ending the practice of EU citizens hiding money away in the Grand Duchy. This move is seen as a significant victory for the campaign against tax evasion, which has intensified since the global financial crisis left governments struggling to find new sources of revenue.
International Cooperation to Combat Tax Evasion
The Group of 20 leading developed and emerging economies is currently working on a legal framework to improve the exchange of information between countries, with the aim of stamping out tax avoidance that could involve more than 50 countries. This international cooperation is crucial in combating tax evasion and ensuring that individuals and companies pay their fair share of taxes.
Key Highlights
- Luxembourg’s decision marks a major milestone in the global fight against tax evasion.
- The country will adopt an international standard for the automatic exchange of bank data by 2017.
- This move is expected to help prevent wealthy individuals from hiding money away in offshore accounts.
- Austria remains the only EU country with rules allowing an EU citizen to open a bank account in another EU member state without informing their tax authority.
The End of Bank Secrecy
“Bank secrecy is dead,” declared EU Tax Commissioner Algirdas Šemeta at a news conference following the meeting. “This is a major step forward in our fight against tax evasion.” The end of bank secrecy will make it more difficult for individuals and companies to hide their assets and avoid paying taxes.
Next Steps
Austria’s Finance Minister Hans Joerg Schelling said his country could not agree to scrap its rules by 2017, but signalled that it may be willing to do so by 2018. The fate of Cyprus, whose banking sector also dwarfed the economy, has made it clear that the practice is no longer tenable.