Belgium signals more cooperation over tax cheats

BRUSSELS, Feb 24 (Reuters) - Belgium’s Finance Minister, Didier Reynders, said on Tuesday the country will improve cooperation and transparency with its European Union partners in tackling possible tax evasion. Belgium is only one of three countries -- the other two are Austria and Luxembourg -- that have opt outs from EU rules on taxing savings held by a citizens outside their home state.

The three chose not to exchange information on who held deposits but keep the names confidential and levy a withholding tax that is passed on to the resident’s home country.

The tax rate of 20 percent is due to rise to 35 percent from 2011, a level seen as putting off investors.

“We don’t want to go to taxation of 35 percent, that’s true, but first we need to have a report from the European Commission about the existing system of exchange of information to make sure it fully complies with the directive,” Reynders told reporters.

“But after that we will go to the exchange of information. That won’t be a problem for Belgium,” Reynders said.

Tax evasion and tax havens have become a hot issue for many countries as national treasuries become more stretched.

EU Tax Commissioner Laszlo Kovacs has proposed widening the scope of the savings tax rules so that trusts and foundations are included, not just individual deposits.

This follows revelations that many Germans squirreled away money in investment foundations in non-EU state Liechtenstein to avoid tax. The Alpine state has also signed up to the EU savings rules.

Kovacs has also proposed barring an EU state from using national bank secrecy rules to avoid helping another bloc member from cracking down on tax evasion.

This step is aimed at Belgium, Austria and Luxembourg and is seen by Kovacs as key to showing the outside world that the bloc is serious about tackling tax evasion.

But unanimity is required among EU states for both proposals to become law, a process that can take years of haggling and Austria has already signalled its unhappiness.

Tackling tax havens is also part of a wider financial reform agenda being discussed globally.

“We don’ have any problem with that. To our best knowledge we don’t have bank secrecy in Belgium,” Reynders added.

It was always possible for a judge or tax authority to go to a bank to obtain information, he said.

“We don’t have the same system as in Austria and Luxembourg,” Reynders said.

Reynders wants the G20 to adopt resolutions on tackling tax havens at a summit in April with the International Monetary Fund implementing these resolutions.

Reporting by Huw Jones, editing by Ron Askew