Compromise reached on EU savings taxation

All fifteen EU states today agreed to a compromise put forward by the Portuguese presidency, which will allow nations to delay scrapping banking secrecy.

Portugal?s compromise deal allowed a withholding tax to be introduced in some countries in conjunction with the information exchange programme first put forward by the British.

Austria held out against the agreement, which was seen as an attempt to force the EU to lift sanctions imposed after the election of the country?s far-right Freedom party.

The agreement marks the end of a two-year impasse between EU finance ministers and will be seen as a victory for the UK.

Britain – fearing the damage the EU’s plans could have on the City’s lucrative eurobond market – opposed plans put forward for a minimum withholding tax on non-resident savings, which would have seen taxes on savings interest treated the same across the EU.

In February, British representatives suggested a alternative system of automatic information exchanges, involving routine disclosure of information from payers of interest to their domestic tax authority, which would then be passed on to tax authorities in other countries.

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