BRUSSELS (Reuters) - European finance ministers are likely to reach an agreement on the automatic exchange of bank data next week, diplomatic sources said on Wednesday.
An agreement to share banking data would mark a crucial step in a drive to curb tax evasion within the European Union.
Under automatic information exchange, if someone living in one European Union country opens a bank account in another EU member state, the tax authority in the person's country of origin will automatically be informed.
The deal, under discussion ahead of a meeting of EU finance ministers in Luxembourg on Oct. 14, would trigger automatic exchange of information for all EU countries from 2017.
Luxembourg and Austria, however, may be given an additional year before applying the rule, a European diplomat said, adding that this would be a "worst case scenario".
Diplomats are working to set a single date for all EU countries, another diplomatic source said, confirming a deal on the issue would be reached next week.
The European Commission wants all 28 EU member states to strengthen rules on how income on savings in bank accounts is taxed, including an automatic exchange of information about which account holders receive what interest payments.
Most EU members already have such an exchange under rules known as the EU Savings Directive, but Luxembourg and Austria have not wanted to give the names of account holders to other countries, and instead get the banks to apply a withholding tax.
Most developed countries already share information on taxpayers and depositors "on demand". Since this requires the authorities in the requesting jurisdiction to suspect wrongdoing it only has limited impact in uncovering unlawful behaviour.
The automatic exchange of information would allow tax authorities to spot tax evasion or illicit money flows more easily.
(Reporting by Francesco Guarascio; writing by Francesca Landini; editing by David Clarke)