The European Commission hopes that the European Union’s finance ministers will agree to an automatic exchange of information on savings when they next meet in Brussels on 14 May.

It would represent the most significant progress in a decades-long effort to open up Europe’s banking system to share information about income earned on savings.

The Commission, which estimates that governments are missing out on tax revenue of €1 trillion because of savings held in secret accounts, has been trying since 2008 to revise its 2005 savings directive to enable the automatic exchange of account information.

That has been held up by opposition from Austria and, until last week, Luxembourg. It has also meant that the EU has been unable to start negotiating on bank transparency with five non-EU countries where many EU citizens have off-the-radar bank accounts: Switzerland, Andorra, Lichtenstein, San Marino and Monaco.

The aim of the automatic exchange of information is to help tax authorities to spot savings-tax evasion without the need to go through the lengthy process of applying for information.

Tax evasion was a last-minute addition to the agenda of an informal meeting of EU finance ministers in Dublin on Friday and Saturday (12-13 April) and Algirdas Šemeta, the European commissioner for taxation and anti-fraud, had not initially been rostered to attend. When he did, he said that he had urged national governments “to raise their ambitions”.

“They must agree on tougher, common solutions,” he said, adding that these should be based on recommendations that he had published in December, which went beyond a call to crack down on tax havens to include action against aggressive tax planning and national tax policies that serve to pit one EU member state against another.

The call for “tougher” solutions also indicates the aspiration to extend the scope of the sort of information that is exchanged.

Germany is a leading proponent of these changes. A confidential document circulated in the meeting in Dublin by Wolfgang Schäuble, Germany’s finance minister, said: “Considering that for tax purposes capital income can be structured as interest, dividends or capital gains, the EU savings directive should cover all kinds of capital income and an overall automatic information exchange.”

Secure banking system

The sudden momentum towards revising the EU’s savings directive, five years after the Commission proposed doing so, comes as tax evasion and banking secrecy have moved up the political agenda.

The collapse of Cyprus’s economy has served as a reminder of how the whole European economy is dependent on a secure banking system. As part of the island’s bail-out, its international lenders are forcing its financial sector, long accused of offering protection to money-launderers, to become more transparent.

But the issue also has an international dimension. The entry into force in the US of its Foreign Account Tax Compliance Act (FATCA), which forces individuals to reveal details of the financial accounts they hold abroad, has put pressure on Europe to follow suit. The subsequent commitment by France, Germany, Italy, Spain and the UK to explore a similar approach – a pledge matched in Dublin last week by several other countries – has raised the stakes further.

There is a political aspect too. The scandal that forced Jérôme Cahuzac to resign as France’s budget minister over allegations that he had €600,000 in a secret off-shore bank account has encouraged the government to make bank transparency a priority. After nearly four years taking decisions to impose austerity on ordinary citizens, many of Europe’s beleaguered finance ministers are only too happy to see their discussions dominated by a fight against tax evasion by the wealthy.

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