The European Union is putting pressure on bank secrecy in
Austria,
Belgium and
Luxembourg, carrying the threat that if these three nations sign up to EU crackdown, then the organisation can start to put pressure on
Switzerland and

Liechtenstein.

Láslo Kovács, the European Commissioner for Taxation and Customs Union has been reported suggesting that the EU Savings Tax agreement should be re-negotiated. On Monday this week, he announced details of a new directive designed to “abolish banking secrecy in respect of communications between tax authorities” within the EU.

According to the text of the proposal presented by Mr Kovács, it would no longer be possible for a country to apply banking secrecy to individuals based in another member state in the case where a request for taxation purposes is made. Countries will be able to retain banking secrecy for domestic clients. “It is unacceptable that one county’s banking secrecy can create an obstacle to another member state determining an individual’s correct taxation position,” Mr Kovács is reported as saying.

At present, there is little exchange of information but if this directive becomes effective, the taxation authorities of one country would become active participants in enquiries in another sovereign state.

Liechtenstein, for example, recently refused to sign agreements with the EU because
Luxembourg and

Austria retain banking secrecy. If the rules change inside the EU, then the aim is to force

Switzerland and Lichtenstein to fall in line and remove banking secrecy for their non-resident account holders.

But all 27 EU member states have to agree on the stance to adopt. Mr Kovács is reported as believing that the EU can reach unanimous agreement on the subject within a year. Perhaps, however, given the fractious internal politics of the union and the long history of banking secrecy in some member states, the current situation may outlast Mr Kovács.