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EU to tighten savings tax law, report says

European Taxation Commissioner László Kovács wants to tighten the two-year-old EU law that taxes foreign savings so that offshore tax dodgers won't be able to use loopholes anymore, according to a news report published on Tuesday.

Kovács has begun to consult the savings industry to find out which measures could work effectively, according the Financial Times newspaper. The EU savings tax law was introduced in the summer of 2005 and created a system where banks are allowed to withhold a tax on savings held by people from another European country. Non-EU countries like Liechtenstein and Switzerland also agreed to apply a withholding tax. According to the FT, Switzerland only raised €100 million in withholding taxes during the first six months of the law's operation. „There is a degree of disappointment with the way it has worked so far, but optimism that it will succeed when the loopholes are closed,” an official from the European Commission was cited as saying in the FT. (