EU tackles loopholes in tax rules, tax evasion

EU regulators announced proposals yesterday designed to close off loopholes in its strict savings tax rules and to crack down on tax evasion linked to cross-border investments, preventing EU investors from hiding millions of euros in Liechtenstein.

Although non-EU countries like Liechtenstein and Switzerland signed up to the EU's savings tax rules in 2005, those rules only cover interest on bank accounts held outside a home state, the Guardian reports.

The current scope of the EU savings tax directive needed to be extended to help Europe in its battle to stamp out tax evasion, Laszlo Kovacs, EU Tax Commissioner, said in a press conference.

The new proposal requires paying agents to apply the rules to payments of interest to structures outside the EU, and widens the rules to payments of interest to certain trusts and foundations. It also proposes extending the scope of the rules to cover certain life insurance contracts.

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