TAXATION OF SAVINGS INTEREST
The Council discussed a draft directive aimed at strengthening EU rules on the taxation of savings
income (17162/13). The amendments to directive 2003/48/EC are intended to prevent its circumvention, reflecting changes to savings products and developments in investor behaviour since it came into force in 2005.
The discussion confirmed broad support for the text. Taking note of the comments made, the
presidency expressed its intention for the amending directive to be adopted before the end of the month, following endorsement by the European Council at its meeting on 20 and 21 March.
The aim is to enlarge the scope of directive 2003/48/EC to include new types of savings income, and products that generate interest or equivalent income. It would include life insurance contracts, as well as a broader coverage of investment funds. And tax authorities, using a "look-through" approach, would be required to take steps to identify who is benefiting from interest payments.
The European Council in December called for the amending Directive to be adopted by March, given its significance in combating tax fraud and tax evasion. Directive 2003/48/EC requires the Member States to exchange information automatically so as to enable interest payments made in one Member State to residents of other Member States to be taxed in accordance with the laws of the state of tax residence. Based on article 115 of the Treaty on the Functioning of the European Union, the Directive requires unanimity for adoption by the Council, after consulting the European Parliament.
Commissioner Šemeta expressed his disappointment that there had been no political agreement at the ECOFIN meeting, but said the discussions had been constructive and it was clear that negotiations with the Member States were nearing the finishing line.
"With the EU leaders’ endorsement next week, I believe that the Savings Tax Directive will still be adopted before the end of this month. A stronger Savings Tax Directive is crucial for all Member States to better identify and chase up tax evaders, and to close loopholes which these evaders are exploiting. Moreover, it has acquired a new significance in the past year. The Savings Tax Directive will part of the legislative framework for applying the new global standard of automatic exchange of information within the EU.
This proposal – together with the revised Administrative Cooperation Directive which I proposed last year – will ensure the widest scope of automatic information exchange between our Member States. And, thanks to the EU's intense involvement in the OECD process, this approach within our Union is fully consistent with the new global standard. Therefore, it is of paramount importance that we swiftly rubber-stamp the Savings Directive, as part of our solid legal basis to implement the new international norm.
Meanwhile, the Ministers gave a very positive response to my report on our negotiations for stronger tax agreements with our five neighbours – including Switzerland. I was pleased today to be able to present good progress, with all five countries ready to work towards alignment with the EU when it comes to tax transparency, in keeping with the Global Standard. That is not something we could have foreseen even one year ago."
Press release
ECOFIN President Yannis Stournaras concluded the outcome of the Council’s discussion as follows: “On the Savings Taxation Directive, I would like to highlight that this has been a priority of the Hellenic Presidency, as it is an important tool in the fight against tax fraud and tax evasion. In this regard, I am pleased to announce that today, thanks also to the constructive approach of our partners, we made a substantial step forward in that there was unanimous agreement that the formal adoption of the Directive will take place at the next Council formation meeting, following the confirmation of this political agreement at the March European Council, in line with the mandate and timetable foreseen by our Heads of State and government.”
Press release
Two holdouts
Reuters reports that Luxembourg's Finance Minister Pierre Gramegna said his country could not yet vote in favour, asking for the matter to be decided by next week's summit of EU leaders. "This is such an important change in our policy that it has to be announced and taken by our prime minister", Mr Gramegna said. Luxembourg has insisted for years it would only agree once financial hubs that aren't EU members, like Switzerland, also sign up. It frets that EU rules might be more stringent than upcoming international standards.
Meanwhile, the WSJ (subscription) reports that Austria's Finance Minister Michael Spindelegger had already told reporters on Monday that his country was ready to agree to the information law now. "It's clear that we cannot wait until a deal with third parties is concluded", he said
© European Council
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