BERLIN Feb 6 (Reuters) - Luxembourg Prime Minister Xavier Bettel said at a news conference in Berlin with Chancellor Angela Merkel on Thursday that his country would not block the expansion of the European Union savings directive in the long term.
Bettel said Luxembourg does not want to hold up an EU agreement on expanding the EU directive that would strengthen rules on how income on savings held in bank accounts is taxed until other separate agreements with other non-EU countries, such as Switzerland, have been reached.
"We will not do a blockade for the sake of having a blockade," Bettel said.
Merkel immediately welcomed the announcement, saying she was pleased that Luxembourg does not want to use Switzerland as an excuse to prevent the expansion of the EU savings directive.
As part of a drive to curb tax evasion, Germany has been putting pressure on all "offshore" banking centres in Europe to apply uniform rules on exchanging account holders' information, with particular attention on Luxembourg and Austria, the only EU states holding out.
The European Commission wants all 27 EU member states to strengthen rules on how income on savings held in bank accounts is taxed, including an automatic exchange of information about which account holders receive what interest payments.
Nearly all EU members already have such an exchange under rules known as the EU Savings Directive, but Luxembourg and Austria have not wanted to reveal the names of account holders to other countries and instead get the banks to apply a withholding tax.