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European Savings Tax Directive - are you sure you're OK? |
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Friday, 12 May 2006 |
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The EU Savings Tax Directive came into force on 1st July 2005. It allows tax authorities of EU member states and certain other key jurisdictions to exchange information on savings income with an individual’s home state. You will be affected if you are resident in an EU member state and earn bank interest or any other savings income in another member state, third country or territory complying with the Directive.
There are actually 45 Jurisdictions so if you want to make sure that you are not going to be affected now or in future, want info on how to avoid this tax legally, best you
The directive was introduced to ensure that rules on free movement of capital do not create opportunities for tax evasion. This is only one part of a major tax reform package launched by the European Commission in 1997. All Member States will be expected to automatically exchange information on interest payments by paying agents established in their territories, to individuals resident in other member states. Most member states will introduce a system of information reporting.
Belgium, Luxembourg and Austria will introduce a transitional period, during which they will levy a withholding tax at a rate of 15% for the first three years and 20% for the following three years and 35% thereafter. 75% of this revenue will be transferred to the investor’s state of residence. Belgium, Luxembourg and Austria will be entitled to receive information exchange from the other member states.
The EU Savings Tax Directive also affects UK Crown Dependencies and UK overseas territories; the dependent territories of the Netherlands; and other countries which have voluntarily agreed to apply the same or equivalent measures.UK offshore financial centres have also joined the Savings Tax Directive, along with the Netherlands Antilles, Aruba and some European centres like Andorra, Monaco, Liechtenstein and San Marino. Most of these jurisdictions, as well as Switzerland, are taking the withholding tax route.
The Savings Tax Directive does not apply to persons who are resident outside the 25 member states of the EU or Crown Dependencies of the UK (The Channel Islands & Isle of Man). Any new countries joining the EU will also have to comply with the Directive.
The EU Savings Tax Directive only applies to individuals and therefore has no effect on corporate structures. For more information on our Offshore Company Services please see the section above
Jurisdictions affected by the EU Savings Tax Directive
• Andorra • Anguilla • Aruba • Austria • Bahamas • Belgium • Bermuda • British Virgin Islands • Cayman Islands • Cyprus • Czech Republic • Denmark • Estonia • Finland • France • Germany • Gibraltar • Greece • Guernsey • Hungary • Ireland • Isle of Man • Italy • Jersey • Latvia • Liechtenstein • Lithuania • Luxembourg • Madeira • Malta • Monaco • Monstserrat • Netherlands • Netherlands Antilles • Poland • Portugal • San Marino • Slovakia • Slovenia • Spain • Sweden • Switzerland • Turks & Caicos Islands • United Kingdom • USA |
