Luxembourg has announced it would ease the secrecy surrounding its banks by implementing rules on the automatic exchange of bank account information with its European Union partners from 2015.
PM Jean-Claude Juncker said Luxembourg would introduce the reforms in two years, in line with the EU Savings Directive.
The rules of the Directive are aimed at creating greater transparency and minimizing tax evasion.
Luxembourg would ease bank secrecy by implementing EU rules on the automatic exchange of bank account information from 2015
Calls for a crackdown on bank secrecy have been increasing, as governments seek to raise more taxes to support their finances.
“We can introduce [the rules] without any danger from January 2015,” Jean-Claude Juncker said.
Luxembourg is a country of only 500,000 people, but its banks and other financial institutions have assets worth more than 20 times the country’s economic output.
Luxembourg’s foreign minister, Luc Frieden, said at the weekend that he wanted to “strengthen co-operation with foreign tax authorities”.
Last week, Germany signed a tax evasion treaty with Switzerland – another European banking centre known for its secrecy.
The treaty is designed to give the German tax authorities the ability to claw back taxes from their citizens who may be hiding money in Swiss banks.
Luxembourg’s announcement leaves Austria as the only European Union country not signed up to the EU Savings Directive.
Austria’s finance minister, Maria Fekter, said recently that she would “fight like a lion” to defend the country’s banking secrecy regime.
However, Austrian Chancellor Werner Faymann indicated on Tuesday that change may have to come.
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Known for its highly secretive banking sector, Luxembourg would now consider a greater transparency in banks activity to help curb tax evasion, Finance Minister Luc Frieden has told a German newspaper.
In an interview published on Sunday, Luc Frieden said he wanted to “strengthen co-operation with foreign tax authorities”.
Germany is among the countries who say it is being used by foreign customers as a tax haven.
Speaking to Germany’s Frankfurter Allgemeine Sonntagszeitung newspaper, Luc Frieden acknowledged that other countries were increasingly demanding more information on what their citizens were doing with their money in foreign banks.
Finance Minister Luc Frieden said Luxembourg would consider a greater transparency in its banking sector
“The international trend is going toward an automatic exchange of bank deposit information. We no longer strictly oppose that,” he said.
On Friday Germany signed a tax evasion treaty with Switzerland – another European banking centre known for its secrecy.
The treaty is designed to allow Germany to claw back taxes from German depositors hiding money in Swiss banks.
Luxembourg is a country of only 500,000 people, but its banks and other financial institutions have assets worth more than 20 times the country’s economic output.
Despite its heavy reliance on financial services, Luc Frieden insisted Luxembourg “does not rely on clients who want to save on their taxes”.
The finance minister has previously said he wants banking customers to be attracted to Luxembourg by the quality of its banking services, rather than it secrecy.
Calls for more transparent banking sectors have grown louder in Europe in recent years, as governments seek to raise more taxes to support their finances amid a global recession.
The recent bailout of Cyprus has also raised particular concerns about the risks posed by small European states with over-sized financial sectors.
