Luxembourg's highly secretive banking system will be forced to share information with the rest of the EU following growing pressure, led by the UK and Germany, to clamp down on people who use accounts at private banks to avoid paying tax.
Jean-Claude Juncker, the Prime Minister of the tiny country which has only 500,000 citizens but holds bank accounts and assets worth 20 times its annual gross domestic product, said that from 1 January 2015 it would tell other EU countries about accounts held by their citizens.
The move would bring Luxembourg into line with all EU countries other than Austria in sharing such information. It follows pressure from the European Commission over the issue, which advocates say can help fight tax evasion. Early this month Germany signed an information-sharing agreement with Switzerland.
"We can, without great damage, introduce automatic exchange of information as of 1 January 2015," Mr Juncker told parliament in a state-of-the-nation address.
"We are following a global movement … We are not caving in to German pressure," he said.
"We cannot deny to the Europeans all that we will have to concede to the Americans in a bilateral treaty."
The change ends decades of bank secrecy in Luxembourg which helped to turn the country into one of the biggest financial centres in Europe and made its citizens the EU's wealthiest.
Once Luxembourg adopts the legislation, it will mean the automatic exchange of data about EU citizens holding bank accounts in Luxembourg, with the aim of cracking down on tax avoidance.
The change will not apply to foreign companies based in the country, which is a popular headquarters for major corporations.Reuse content