Belgian back-room deals to preserve European secrecy

[Update 1 Nov 19 5.30pm EST, thanks to Florian van Megen, in the offices of Sven Giegold: This blog now has some additional background details

Update 2: we now have this confirmed from the website of Sven Giegold, who is a European MEP.

The European Union's savings tax directive is an excellent idea: governments automatically report to each other, on a multilateral basis, the income-generating assets of each other's citizens, so that those governments can tax them properly. Unfortunately, it is full of loopholes - punched in the directive as a result of efforts by the likes of Luxembourg and the United Kingdom to preserve as much secrecy as possible in the financial sector.

Recently, some in the EU have been trying to patch up some of the loopholes. A second directive has been initiated on administrative assistance in tax matters, which is a parallel attempt to have a similar result to the Savings Tax Directive. The original proposal from February 2010 is here. Take a look at Article 8 on page 16: the original proposal does not specify the categories of information to be exchanged. This was amended, also in February, by the European parliament, initiated by Mme Alvarez Magdalena (a Spanish Socialist, MEP, and tax investigator) and this produced a draft arguing for transparency to be applied on a nicely transparent set of things:

• Income from employment
• directors' fees
• dividends
• capital gains
• royalties
• life insurance products not already covered by the STD and other measures
• pensions
• ownership of and income from immovable property

But now, thanks to Attac-Austria, a murky document has come to light on this subject. It appears to be an effort by the presidency of the Council of the European Union, currently held by Belgium (yes, a secrecy jurisdiction) to water down the initial proposal for the directive and, it seems, to make the initiative rather toothless. Look at this document, from the Belgian presidency - and look at what has been crossed out. Dividends, capital gains, and royalties! (And, a bit further down, a more minor change: the date has been modified slightly.)

We can't independently verify the authenticity of this document, but we have no reason to doubt it. If this is indeed what it looks like, then this is a scandal, and Attac Austria have performed a valuable service. The Belgian presidency has been caught with its fingers in the till.