BERLIN (Reuters) - The European Union’s five largest economies agreed on Tuesday to deepen cooperation on tackling tax evasion, Germany said, raising pressure on smaller members Austria and Luxembourg to join a crackdown on cross-border cheats.
The finance ministers of Germany, France, Britain, Italy and Spain (G5) have written a joint letter to the European Commission about their pilot project which other member states may also join, the German finance ministry said in a statement.
Earlier on Tuesday Austrian Chancellor Werner Faymann said his country would join Luxembourg for talks with the wider EU on fighting cross-border tax fraud that could lead to an overhaul of the bank secrecy rules the two nations have defended.
Luxembourg and Austria have long refused to share personal data on savers with fellow EU members but since the Cyprus bailout have come under renewed pressure from EU peers keen to collect more tax revenue from citizens’ offshore wealth.
The G5 initiative envisages as a first step the automatic exchange of information between the signatory countries concerning investment income.
“The finance ministers of the G5 express in their letter the expectation that other EU member states will join in order to set a new standard within the EU on the increased automatic exchange of information,” the German finance ministry said.
The European Commission’s top official in charge of tax policy welcomed the move.
“I can only support any effort to speed up expanding the scope of automatic exchange and of pushing our standard globally,” Algirdas Semeta said in a statement.
“Transparency is the key when it comes to fighting tax evasion and the global environment today leaves little room for those who resist it.”
The European Commission warned Austria on Monday that its banking secrecy would put it in a “lonely and unsustainable position” if it did not adopt the same rules as other countries in sharing data on foreign depositors.
EU member Cyprus had to negotiate an international bailout last month after its oversized banking system - swollen with foreign funds lured by low taxes and light regulation - suffered heavy losses in the Greek debt crisis.
Additional reporting by John O'Donnell in Brussels; Writing by Gareth Jones; Editing by Susan Fenton