EU agrees to share tax information

People will soon be finding it more difficult to evade the Maltese taxman through secret bank accounts elsewhere in the EU, after member states reached a deal on sharing information on funds held abroad.

Finance Ministers meeting in Brussels yesterday agreed that as from 2015, member states will have to automatically communicate information provided that it is readily available.

The deal still allows safeguards that will prevent so-called “fishing expeditions” for information. In fact, a state will have to make a specific request for information citing the identity of the person under investigation and the purpose for which it is sought.

The agreement has been difficult to achieve as some member states, particularly Austria and Luxembourg, were resisting it because of their sizeable clienteles of foreigners holding hidden taxable incomes in their jurisdictions. Now that the resistance has been overcome, the EU will be making it much more difficult for its citizens to evade tax.

“This agreement is very important and is sending out the message that the EU is taking tax evasion seriously,” Malta’s Finance Minister Tonio Fenech told The Times at the end of the Finance Ministers’ meeting.

“Now it will be possible for us to receive information on Maltese individuals who hold substantial amounts of taxable income abroad. Currently this is not possible for us where we don’t have a double taxation agreement.”

Under the new directive, if the Maltese tax authorities are investigating an individual on tax evasion, they will be able to request and receive information on all his income, including capital holdings, in all the other 26 EU member states. Information will also include holdings in bank accounts.

Meanwhile, EU Finance Ministers yesterday also gave their blessing to €67.5 billion worth of funds and guarantees to be used for Ireland’s bailout.

According to the latest available data, Malta will be guaranteeing between €17 and €22 million of these funds.

Ireland was forced to take the bailout after the cost of refinancing its huge deficit became unmanageable.

It is now in the process of passing what is said to be the toughest budget in its history, with draconian austerity measures drawing street protests.