Probe into cross-border banking

Date: 10/10/1996

THE issue of tax harmonisation is inclined to make the eyes of even the most interested accountant glaze over.

Every now and then, however, the subject becomes very real and very interesting even to the average citizen.

Recent events at Kredietbank-Luxembourg provide just such an example. In the same week that the Belgian government was struggling to lop 2 billion ecu off the 1997 budget, it emerged that the judicial authorities were investigating 10 billion ecu of Belgian savings allegedly salted away in accounts at KB-Lux.

Although there is no proof yet as to their motives, there are suspicions that the Belgians were aiming to reduce their tax bills.

Experts estimate that these savings alone would have provided 250 million ecu in tax revenue to the Belgian treasury.

The inquiry got under way in August under Brussels examining magistrate Jean-Claude Leys after five employees of KB-Lux who lost their jobs two years ago brought evidence to the authorities of 300 Belgian accounts worth 350 million ecu on the bank's books.

It now appears that this may be just the tip of the iceberg. There are believed to be 40,000 accounts totalling 10 billion ecu belonging to companies and individuals. One person is alleged to have declared an income of 13,000 ecu to the fiscal authorities in one tax year, but stashed away a million more in his KB-Lux account.