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. Last Updated: 07/27/2016

Ministers Seek Tax Deal as EU Leaders Open Summit

SANTA MARIA DA FEIRA, Portugal -- The 15 European Union leaders began a two-day summit Monday, but the spotlight was on their finance ministers who struggled for a second straight day to find a compromise on how to tax interest Europeans earn on savings in other countries.

The finance ministers hoped to present a tax plan to EU leaders, but officials held out little hope a deal could be reached on an issue that has been debated fruitlessly for years.

All EU members want to eradicate a cross-border tax dodge that enables citizens of one country to earn tax-free interest on savings in another and costs billions in lost revenue.

Germany initially led calls for a common 20 percent withholding tax on interest from savings accounts held in banks anywhere in the EU. But after long debate, 13 EU nations now prefer countriesto send information about account holders' interest to their home countries so they can be taxed there.

"If we can get agreement on the single currency, it would be shocking if we can't get agreement on savings-tax harmonization," French Finance Minister Laurent Fabius said. "But the starting points are quite different. ? It won't be easy."

The deadlock over the withholding tax shows the difficulty the EU has in implementing cooperative policies in support of Europe's single currency. It also blocks agreement on a "code of conduct" to eliminate corporate tax breaks that give some countries an unfair edge in the EU.