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24 March 2014

Comments on new Savings Tax Directive rules: EBF, Insurance Europe, BdB, ABBL

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"There is a crucial need for this regime to be based on a single, consistent and coherent model, as banks and tax administrations are investing substantially in the development of systems that will enable them to comply with the new requirements", said EBF chief executive Guido Ravoet.

EBF: Banks urge EU to reconsider approach to Savings Tax Directive

The EBF is urging policy-makers in the EU to reconsider the agreement on the review of the Savings Tax Directive. European banks underline the importance of adopting a coherent model for the automatic information exchange between countries and a realistic timetable for implementation.

The current EU plans will lead to disruption and unnecessary costs for banks because they are not compatible with the multilateral regime adopted by the Organisation for Economic Cooperation and Development (OECD) for the Automatic Exchange of Information (AEOI) between countries.

“European banks fully support the fight against tax evasion, notably by means of information exchange. But this new system needs to be efficient and cost-effective", said Guido Ravoet, Chief Executive of the EBF. “There is a crucial need for this regime to be based on a single, consistent and coherent model, as banks and tax administrations are investing substantially in the development of systems that will enable them to comply with the new requirements.”

The EU Savings Tax Directive was first adopted more than 10 years ago. The EBF believes that EU policy-makers need to acknowledge that this Directive is based on standards that are not compatible with the new OECD standards. The EBF also insists that the timetable for implementation must be achievable both for governments and for business. This requires a proper and timely consultation process, an adequate assessment of all legal and constitutional aspects for data protection and sufficient lead-time for all stakeholders to develop and adapt their systems and procedures.

Press release

Insurance Europe expressed concerns, saying the Savings Tax Directive could duplicate reporting: "The European Council yesterday gave its endorsement to proposed amendments to the EU Directive on Savings Taxation, which governs the taxation of cross-border interest payments. The amendments will extend the Directive to include benefits from certain life insurance products, although existing contracts are excluded. In view of the work currently well underway at the OECD to create a worldwide automatic exchange of tax information, Insurance Europe considers the timing of adoption of the Savings Tax Directive unfortunate, as it introduces requirements similar to those currently discussed globally.

Insurance Europe urges Europe’s policymakers to do their utmost to avoid imposing duplicate reporting requirements at EU level, as this would simply create an unnecessary additional administrative burden and cost, to the detriment of EU insurers and their clients."

Press release

The Association of German Banks (BDB) issued a statement stressing that it was important to see the enhancement of the EU Savings Directive adopted by the European Council in the context of other, much more extensive international efforts in this field.

"Uniform legal and technical standards for the automatic exchange of information must be agreed at OECD and EU level and these standards need to be consistent, practical and sustainable", Kemmer continued. It was also important that the industry was allowed sufficient lead time to implement the new requirements. The revised EU Savings Directive now adopted was based on a proposal issued many years ago, which had been rendered obsolete by the current, much more far-reaching initiatives. "With this in mind, the Directive should on no account be implemented in isolation but should be integrated in terms of timing and content into a single international mechanism for exchanging information. This will keep the heavy burden on banks generated by implementation to a manageable level."

Press release

ABBL: An intermediary step towards a single global standard

Luxembourg banks have been actively preparing for the introduction of the automatic exchange of information at least since 2009, when Luxembourg agreed to introduce the exchange of information on demand in its double taxation treaties.

In the interest of the EU wealth management industry, the ABBL would like to reiterate its call for a level playing field regarding the implementation of the AEOI. ABBL therefore urges the European Commission to continue its efforts and to move forward swiftly in order to ensure that concerned non-EU countries continue to apply measures equivalent to those in the EU. In this context, ABBL welcomes Prime Minister Bettel’s announcement that Luxembourg received guarantees that the EU Commission’s negotiations with these countries would be concluded by the end of the year.

ABBL also calls on authorities to ensure that a single, consistent and coherent framework for the automatic exchange of information is put in place. EU and OECD approaches must be aligned in order to avoid a costly and burdensome proliferation of different AEOI standards and deadlines of entry into force. ABBL joins colleagues of the European Banking Federation by insisting on streamlined AEOI standards whose costs and administrative burdens are bearable for the financial industry and that are manageable from a day-to-day operational point of view.

While Luxembourg is specialised in cross-border financial activities in the European single market to a much larger extent than other countries, the implementation of the new information exchange requirements is essentially no more difficult for Luxembourg than for the rest of the European financial industry.

Press release

Council adopts new rules on the taxation of savings income

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