Grand Duchy keeps secrets

EU deal protects savings secrecy – but its days could be numbered. Luxembourg, Belgium and Austria have clinched an EU savings tax deal that will shore up secrecy in their savings sectors – at least for now. Bettina Graeber, senior customer relationship and sales manager at Crédit Agricole Indosuez Luxembourg, argued that the deal was vital to the Grand Duchy’s savings industry. Without secrecy, she said, Luxembourg would have to trade on its reputation for competence and language skills alone. She feared the deal had a limited life, as the EU would seek to improve transparency. Rafik Fischer, head of investment funds and custody at KBL in Luxembourg, countered that the city-state’s savings industry was credible enough to survive without EU favours. The 15 EU states have agreed on rules to crack down on tax evasion and fraud. While 12 member states will implement automatic information exchange concerning income from savings in another member state from January 2004, the three dissenters will instead apply a withholding tax to savings held by residents of other member states. The revenue will then be shared with the country of residence.