Luxembourg and Austria have agreed to a new level of automatic exchange of tax information within the EU. A months long impasse among the 28 member states was resolved after Luxembourg received assurances that non-EU countries in Europe would participate in a similar scheme.

European countries including the Grand Duchy have cooperated on fiscal matters for more than a decade under the “EU Savings Directive”. However, Luxembourg and Austria have been collecting a withholding tax on non-residents’ interest payments, and forwarding the funds anonymously back to the taxpayers’ home country (although individual savers could voluntarily share their identities). Other EU countries had provided the taxpayers’ identity.

A draft accord reached to increase the level of data sharing--to include some types of dividend payments, for example--had been blocked since last year. Ministers in Luxembourg’s current and previous cabinet had said the Grand Duchy wanted to wait until updated information exchange agreements were signed with Andorra, Liechtenstein, Monaco, San Marino and Switzerland.

But on Thursday, Xavier Bettel, Luxembourg’s prime minister, said his country had given the updated EU Savings Directive a “green light” after receiving guarantees that talks with those non-EU countries would be fruitful, according to reports by news agencies AFP and Bloomberg.

“This is indispensable for enabling the member states to better clamp down on tax fraud and tax evasion,” Herman Van Rompuy, president of the European Council of government chiefs, said in a press statement issued after a summit in Brussels on Thursday. “This is a clear message that Europe is fully committed to the new single global standard for automatic exchange of tax information.”

Continued tax exchange talks

In February, the Grand Duchy “committed to early adoption” of the “single global standard for the automatic exchange of information between tax authorities worldwide” developed by the OECD, a think tank for wealthier countries that is working with G20 club of the world’s largest economies. A draft technical proposal is due in September.

Luxembourg is also in the final stages of negotiating a tax cooperation deal with Washington, as part of America’s FATCA law that comes into effect this summer.