April 15, 2013 / 3:53 PM / 6 years ago

Luxembourg, Austria close ranks in EU tax talks

VIENNA (Reuters) - Austria and Luxembourg pledged on Monday to work together in negotiations with European Union partners over how to crack down on cross-border tax cheats without abolishing traditional banking secrecy for domestic savers.

Austrian Vice-Chancellor Michael Spindelegger addresses the 67th session of the United Nations General Assembly at U.N. headquarters in New York, September 28, 2012. REUTERS/Keith Bedford

A gap opened between the two countries this month when Luxembourg changed its long-held policy and said it was prepared to share information on foreign EU depositors from 2015, leaving Austria the only EU country that refuses to do so.

That has piled pressure on Vienna to dilute its coveted banking secrecy by automatically exchanging bank data on foreigners. Austria has sent mixed messages on this ahead of a EU summit in May supposed to address the matter.

Austrian Foreign Minister Michael Spindelegger and his Luxembourg counterpart Jean Asselborn sought to put up a united front, telling reporters after they met in Vienna that they would not be played off against one another in negotiations.

“We want to stay together with our partner Austria, which long shared our position, and see how we can manage together the appointments we have ahead,” Asselborn said.

“We Luxembourgers do not see ourselves as the good guys and Austrians as the bad guys,” he said, insisting Luxembourg had no desire to harm Austria when it adopted its policy U-turn.

Conservative Finance Minister Maria Fekter has defied pressure on Austria to automatically exchange data on foreigners, while Chancellor Werner Faymann, a Social Democrat, has said Austria may do so as long as its citizens’ details stay confidential.

Spindelegger, who is conservative party leader and deputy chancellor, said the task ahead was finding a common view in the EU on just what the goal was. “Everyone understands automatic information exchange a bit differently,” he said.

“What we don’t want is that all data is automatically made known - for Austrians and foreigners - to the state, which then passes on the foreign data. We want to preserve banking secrecy for Austrians. That is the big difference we have to other countries,” he said.

Austria instead has banks withhold a 35 percent tax on EU citizens’ interest income and returns the money - anonymously and minus handling fees - to home countries.

Asselborn said the EU’s campaign to crack down on tax evasion had to tackle offshore financial centres.

“When fighting tax havens - the real tax havens, not Luxembourg and I believe not Austria - I only hope that we act as tough as we have been for example with small EU countries,” he said.

“We can’t tell the English: ‘OK, we have to talk about tax havens, but in confidence’. I find clarity is better.”

Reporting by Michael Shields; editing by Ron Askew

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