Tax dodgers will have a tougher time in Luxembourg
By Mark Thompson and Alanna Petroff @CNNMoneyApril 10, 2013: 12:28 PM ET
Europe's last bastions of banking secrecy are crumbling, as governments come under pressure to do more to tackle tax evasion.
Luxembourg said Wednesday it would begin sharing information about depositors' accounts in 2015, just two days after fellow hold-out Austria signaled it would enter EU negotiations to do the same.
"We can introduce automatic exchange of information from January 1, 2015, without causing a lot of damage [to our banking sector]," Luxembourg Prime Minister Jean-Claude Juncker told parliament, marking the end of the country's longstanding tradition of banking secrecy.
Strapped for cash, governments are cracking down on global tax evasion and trying to inject greater transparency in Europe's banking sector.
Smaller countries with large financial services industries are keen to defend their reputation in the wake of theCyprus banking crisis,which saw depositors contribute for the first time to an EU-backed bailout.
Luxembourg, which relies on financial services for 36% of gross domestic product, and Austria were the only EU member states that had stubbornly maintained banking secrecy rules as other countries agreed to share information automatically.
In a newspaper interview Monday, Austrian Chancellor Werner Faymann said he was willing to discuss relaxing bank secrecy laws to allow the exchange of data about foreign depositors.
"We're ready for negotiations on how to improve the sharing of bank account data to support the fight against tax evasion," he said. "We'll need to discuss within the EU how to achieve this, but we will certainly cooperate fully."
Any change would not apply to bank accounts held by Austrians, Faymann said.
Countries offering tax havens and anonymity for depositors have come under increased pressure in recent months to be more open about their accounts.
Calls for greater transparency intensified after the EU agreed to a 10 billion euro bailout for Cyprus, which was brought down by losses sustained in its outsized banking industry. The island nation's banks had grown to several times the size of the economy thanks to foreign deposits attracted by high interest rates and low taxes.
Major tax haven users exposed
Luxembourg's decision to fall into line with its EU partners comes just days after documents were leaked that reveal the names of more than 100,000 people, including politicians in France and Russia, with offshore tax haven accounts.