France Targets Tax Havens As Luxembourg Bows

French President Francois Hollande has vowed to "eradicate" tax havens "in Europe and the world", as the EU financial hub of Luxembourg succumbs to calls for greater transparency.

As part of the effort, Mr Hollande said that French banks would be required to declare all of their subsidiaries around the world.

The announcement from France's leader comes as Luxembourg revealed it will exchange information with the rest of Europe to help fight tax evasion.

The widening impetus to improve bank transparency has been pushed forward by some leading countries including Britain, Germany and Australia.

Jersey has come under pressure for its favourable tax status

The initiative, which is to start in 2015, follows international pressure on Luxembourg to end its policy of banking secrecy that critics say has helped people hide money from tax authorities.

The tiny EU nation, the world's only Grand Duchy, has become a financial European hub for a number of multinational corporations.

Although it is smaller than Dorset it has one of the highest per capita GDPs globally.

According to the US's Central Intelligence Agency, 40% of Luxembourg's GDP comes from cross-border financial flows.

The country's capital only has a population of 90,000 but boasts a huge financial industry with more than 3trn euros (£2.7trn) in assets.

Many multinational firms now have Luxembourg financial hubs

Its government said it will set up an automatic exchange of information about interest payments made to EU citizens with bank accounts in Luxembourg "so as to ensure taxation according to the laws" of the customer's home country.

The move is likely to increase pressure on Austria, the EU's other holdout on providing tax information.

On Tuesday Austria said it would join Luxembourg for talks with the EU on how to crack down on cross-border tax cheats, signalling an easing of Vienna's hardline stance on its coveted bank secrecy.

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