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EU losing 1 trillion euros a year to tax dodging

EU losing 1 trillion euros a year to tax dodging

BRUSSELS | Fri Apr 12, 2013 11:47am EDT

(Reuters) - Tax dodging causes the European Union to lose around 1 trillion euros of income each year, the president of the European Council said on Friday as he announced that EU leaders would discuss the issue at a summit next month.

This hemorrhage of tax revenues is equivalent to the entire annual economic output of Spain, and far exceeds a total of about 400 billion euros committed to bailouts of euro zone members Greece, Ireland, Portugal and Cyprus in coming years.

"We must seize the increased political momentum to address this critical problem," Herman Van Rompuy, who chairs meetings of EU leaders, said in a statement broadcast on the Internet.

"Tax evasion is unfair to citizens who work hard and pay their share of taxes for society to work. It is unfair to companies that pay their taxes - but find it hard to compete because others don't."

Van Rompuy's message, and the addition of the issue to the agenda of the summit in Brussels on May 22, will add to pressure on Austria to conform with the rest of the EU on sharing information about bank depositors.

Austria is the only one of the EU's 27 member states unwilling to sign up to EU rules on the automatic exchange of depositor data, with the finance minister intent on protecting Austria's long history of banking secrecy.

EU policymakers say having all EU countries signed up to the EU savings directive, the piece of legislation that calls for sharing of depositor data, will help to combat tax evasion.

Luxembourg, which has the biggest banking sector in the EU relative to its gross domestic product, announced this week it was willing to sign up to the directive from January 2015, leaving Austria as the only EU stand-out.


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