Further setbacks for EU savings tax law

An EU law cracking down on untaxed expat savings is being held up by other countries refusing to come on board, an EU official has told EUPolitix.com.

The news comes one week after Switzerland, supposedly the hardest nut to crack, agreed to sign up.

EU ministers finally approved the law - which will see banks shopping EU citizens who try to hide savings in other EU states - last June with the implementation date of January 1 2005.

But it can only come into force if five other territories, Switzerland, San Marino, Lichtenstein, Andorra and Monaco, agree to similar rules by the end of June.

An official present at a closed meeting of EU ambassadors on Wednesday told this website that Lichtenstein is now refusing to co-operate.

"There are no real signs for optimism", he said.

And he said while there has been movement in the other countries, they are also stalling.

One example is an offer from San Marino which is "good but not perfect".

On the positive side, fears that the law could be held up by Switzerland's slow legal procedure may have been unfounded.

But EU ministers are likely to accept a "letter of confirmation" that the law will be ratified to get around the problem, the official said, although if the issue goes to a referendum it may not be possible to guarantee a positive outcome in Switzerland.

Internal market commissioner Frits Bolkestein will tell EU finance ministers meeting in Luxembourg on Wednesday that the European Commission will continue to put pressure on these outstanding countries to come to an agreement.

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