recent moves by Germany to force Liechtenstein to crack down on tax cheats, the European Union is going a step further, effectively declaring battle today with Liechtenstein, Monaco, Andorra and Switzerland in their ‘war on super-rich tax cheats.’
The EU's council of economics and finance ministers, or Ecofin, is meeting in Brussels today to hammer out a strategy to force Europe’s tax havens into submission. They plan to do so by strengthening the EU’s 2005 savings tax directive, through which the ‘tax haven nations’ have easily been able to find loopholes.
What they’re going after is the increasingly common practice of very wealthy citizens of European countries domiciling themselves in small nations outside the EU with loose tax laws. Germany has recently gone hard after the practice, led by finance minister Peer Steinbruck, who says the tax cheats cost Germany approximately €30 billion in lost revenue.
The push began when Germany's intelligence service reportedly paid €4.2 million to an informant at Liechtenstein banking group LGT for a list oh hundreds of names of German nationals who had escaped German taxation by keeping their money in the tiny principality. Not content to catch just their own citizens, Germany then said it would provide names of other EU nationals hiding money in Liechtenstein to their respective governments. Liechtenstein responded with indignation, with a government official even making an unfortunate comparison between the effort and the Gestapo.
But Steinbruck refused to back down, and soon the UK announced it had conducted its own investigation, reportedly paying an informant £100,000 for information on UK citizens keeping their money in Liechtenstein.
The issue has captured the attention of the press, particularly in the UK and Germany, and it seems likely that Brussels will soon dole out a round of sanctions to the three main European offenders, Andorra, Liechtenstein and Monaco. With many saying that these tiny city-states are abusing their accident-of-history statuses as independent nations to launder money used for tax evasion, the drug trade, crime and terrorism, they may start to face increasingly hostile representatives from their neighbors. None of these states are in the EU.