The plan has come about in attempt to rescue the Savings Tax Directive, proposed in 2000, aimed at combating capital flight and tax evasion by allowing EU tax authorities to automatically exchange information amongst each other.

A compromise arrangement would see Austria, Belgium and Luxembourg exempt from having to exchange information, instead allowing them a transitional period where they would implement a withholdings tax on savings instead of providing information.

The three countries have agreed to this in principle so long as rival 'tax havens', including Switzerland, Liechtenstein Monaco, Andorra, San Marino and the US impose similar measures.

But OECD secretary general Donald Johnstone, in a letter to the EU, lambasted the plan, saying it would damage his organisation's drive to stamp out harmful tax practices.

Already the plan has drawn protest from Caribbean and Pacific Island tax havens, which have threatened not to co-operate if Luxembourg is exempt.