Following the recent banking summit, and Despite bitter opposition from its banks, the Austrian government has announced its decision to enter a bank tax in Austria. According to Finance Minister Josef Pröll, it is Merely a “question of justice”.

Austria’s Chancellor Werner Faymann has confirmed that the introduction of a bank levy is now inevitable, with or without backing from the European Union regarding a Europe-wide tax.

Although the precise details of the tax have yet to be determined, Faymann has made known that the new levy could be introduced from as early as 2011. Determined to consolidate the country’s budget, Pröll is eager to Implement the new levy as quickly as possible.

Proposals put forward by Chancellor Faymann include imposing a levy of between 0.07% and 0.1% on the taxable base. Other details, such as who is to pay the tax, and what the basis for calculating the tax will be, as well as the exact tax rate, have yet to be decided. As a benchmark, has proposed Faymann generating a volume of around EUR 500m annually.

A working group consisting of Representatives from the Chancellery, the finance ministry, issuing banks and other banks, will be set up in order to put forward proposals and to firm up details for the new tax. Nevertheless, Chancellor Faymann has underlined the fact that ultimate responsibility rests with both the government and parliament.

Having agreed in principal to the tax, Josef Pröll once again warned of the dangers of imposing too great a burden on the country’s financial institutions, and reiterates that the burden must not be borne by either borrowers or savers. According to Pröll, the greater the pressure imposed on the banks, the greater the pressure to pass that burden on.

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Austria has now officially been removed from the Organization for Economic Cooperation and Development’s (OECD) “gray list” of countries Deemed uncooperative in international tax matters.

Indeed, Austria now appears on the OECD’s much-coveted “white list” of countries that have fulfilled the organization’s 12 official requirement to conclude double tax or tax information exchange agreements, Providing for administrative assistance in tax matters under Article 26 of the OECD Model Convention .

According to the Austrian Finance Ministry, Austria has in fact exceeded expectations, having signed 15 bilateral agreements In accordance with the OECD on tax information exchange standard.

Austria gave the go-ahead for the creation of legislation to relax its traditional banking secrecy laws and conform with OECD standards on tax information exchange at the beginning of the month, and has, since then, been busily Negotiating bilateral agreements ahead of the G20 summit meeting. However, it has made clear that its traditional bank secrecy laws will only be lifted for those accounts held by non-residents who are not subject to Austrian tax.

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