Another bastion of banking secrecy has fallen as Austria has backtracked on previous refusals to sign up to agreements to swap tax information with other governments.
The country’s Chancellor, Werner Faymann, says he will begin talks with the US to implement its Foreign Account Tax Compliance Act (FATCA) and join several other European countries, including the UK, who have agreed on deals.
He has also announced that Austria will also agree to the Organisation of Economic Co-operation and Development (OECD) convention on mutual assistance in tax matters.
While acknowledging that Austria is not a tax haven for rich people and businesses, the country believes joining the international movement to reveal the assets of people who hide money overseas is morally right.
Chancellor Faymann said: “We are determined to pursue what is a constructive and clear path in the fight against tax evasion.”
Tax evasion
Part of that fight will focus on making complex structures around trusts and company ownership more transparent.
The country is also backing talks between the European Union and other countries about new tax sharing agreements, particularly the EU’s European Savings Tax Directive regulations.
The Chancellor added that Austria will now play a pivotal role in combating tax evasion.
One reason for the Austrian willingness to negotiate is that the country wants to see any information exchanged match OECD standards and that all corporate structures, including shell companies and trusts, are properly identified.
Austria also says bilateral tax agreements with Liechtenstein and Switzerland are due for review to ensure they conform to current regulatory demands.
However, when Austria signs a new agreement, the secrecy of Austrian taxpayers must be paramount and information about them will not be divulged – and this will not be compromised by any agreements made by the EU.
Secrecy laws
To head-off criticism, Chancellor Faymann warned: “We must be wary of having the reputation of a country which shields tax cheats is much worse than seeing the potential relocations of wealth that might follow.”
Now Austria is looking to an announcement by the EU on the automatic exchange of banking information – which could see the end of national banking secrecy laws – and offering support and keenness to negotiate.
Austria’s default compromise position on any new agreement is to hand over the details of foreigners holding accounts with Austrian financial institutions but to keep secret the details of Austrian citizens.
The country will also repeat demands made by finance minister Maria Fekter, for more stringent investigations into the ‘real tax havens’ which are mainly British-dependent territories such as Gibraltar, the Cayman Islands and the Channel Islands.
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