Why only now?

It seems as if time is up for Europe's banking secrecy. It's getting harder and harder for people to find ways of hiding their assets in European countries to circumvent the tax authorities. And it will become harder and harder for international corporations to find strategies with which they can avoid paying tax on a large scale.

If one thinks how much money is at stake here, it's difficult to understand why this issue hasn't been tackled sooner. According to EU figures, member states lose thousands of billions of euros every year. Imagine what could be done with that amount of money! Even if one were to add together all the EU's bailout packages so far, there'd still be change left over. It's especially irritating that it's the ordinary tax payer who has had to make up the loss of revenue.

In spite of that, scarcely anyone in government has been interested in facing this issue until now. It has only been the financial crisis that made people start thinking about what is really a matter of justice: why are taxes going up in Greece, Portugal and Spain, while some rich individuals and corporations get away with paying nothing? 

Our very own tax havens

It's obvious that firm measures are needed. But the reason that the heads of state and government have discovered the topic so late is that some states have been profiting from the lack of interest: Luxembourg and Austria, who have been applying the brakes on any concerted action, and the UK of course. The city of London is not only by far the most important financial center in Europe, it's also a hub for financial investments in weakly-governed tax havens like the Channel Islands and the Cayman Islands.

Cyprus is an even clearer example: European tax payers have had to use the ESM rescue fund to finance failed banks - which only managed to get so big because of unfair competition.

Decisions not made yet

But still, nothing is settled yet. Luxembourg has agreed to give up its banking secrecy in regards to interest payments, but it has tied its agreement to automatic information exchange on other forms of capital income to the success of negotiations with financial centers which are not EU members, such as Switzerland, Liechtenstein, Monaco, San Marino and Andorra.

Other countries have also avoided making clear statements. But it's these other capital income sources that are the important ones. Data exchange is no doubt on its way - the pressure to introduce it is so high that no country can afford for long to be accused of being a bastion of tax evasion. But it's also crucial what data will be finally be included in the exchange. That's what will show whether EU member states really are serious about their commitment. And it will also be a measure of the EU's credibility when it negotiates with non-EU member states. The EU will only get them to reach a global agreement if its own member states are all pulling in the same direction themselves.