EU backs savings tax deals but start date unclear

European Union finance ministers gave the thumbs-up on Wednesday to a hard-fought plan to tax millions of euros of savings hidden abroad, but postponed a final decision on the start date to later this month.
After years of bitter talks, the ministers backed savings tax deals with Switzerland and four other non-EU financial centres, and will put pressure on Berne in the coming weeks to ensure the new tax rules can start on January 1 as scheduled.
The plan will allow EU states to get hold of untaxed cash stashed abroad either by sharing bank details on tax dodgers or by taxing up to 35 percent the income from savings in return for allowing the countries concerned to keep banking secrecy.
"It's clear that everything has been agreed in terms of content and that similar or equivalent measures will be introduced everywhere," German Finance Minister Hans Eichel told a news conference on the sidelines of EU talks in Luxembourg.
"We expect that to happen on January 1, 2005. We have a clear position - we want January 1. It's now up to the Swiss to do their part".
Cash-strapped EU countries such as Germany have been strongly supporting the savings tax plan in the hope of reaping additional tax revenues and reining in ballooning deficits.
But tax revenues may be scant as the EU tax would apply only to the income from savings and not to the base capital itself.
Tax deals with Switzerland, four non-EU states - Monaco, Liechtenstein, Andorra and San Marino - and several British and Dutch offshore centres were a precondition for the new rules.
The new tax rules need to be implemented at the same time in all participating countries but Berne, a key player in the EU tax plan, has not yet committed itself to a firm start date.
Switzerland, a leader in the offshore industry catering to rich clients wanting to deposit money outside their home state, agreed in May to sign up to the tax plan
A spokesman for Switzerland's Integration Office reiterated a willingness to start adopting the savings tax as quickly as possible. He said parliament could conceivably approve it by the end of the year, but he could give no guarantee on timing.
Swisss reservations on timing are due to a tight parliamentary schedule and the possibility of a referendum being called on the whole question.
Italy and Austria said the EU definitely did not want to adopt the savings tax rules unilaterally on January 1 without other countries following suit.
EU ministers have asked the European Commission to press on with negotiations with Switzerland and secure by end-June a firm commitment that the savings tax rules can start as scheduled.