Luxembourg, 12/04/2005 (Agence Europe) - The Ecofin Council has examined the transposition of directive 2003/48/EC in Member States on savings tax. It examined ratification of agreements on equivalent measures to apply in five third countries (Andorra, Liechtenstein, Monaco, San Marino and Switzerland) as well as in ten dependencies and associate territories of the United Kingdom and the Netherlands. On 7 June, ministers will take a last look at the horizon before the expected entry into force on 1 July 2005 of the Community legislation. Member States announced that they wanted “written guarantees” from third countries and associative territories implementing identical legislations.
Jeannot Krecké the Luxembourg minister of the economy and external trade said that national transposition is almost finished and noted the “great progress” in the ratification agreements by the third countries and territories associated with the United Kingdom and Netherlands. Only Liechtenstein and Monaco have not yet transposed these agreements for different reasons, added Krecké. Laszlo Kovacs, Commissioner for tax said that he was completely satisfied by the good compromise on pending subjects.
Two points in the directive remain subject to interpretation from ministers. The first involves pooled investment bodies. The directive will include all indirect and direct investments worth more tan 15% of debt equity. The second point deals with ways for calculating interest for 2005. This will be subject to the European directive on interest payments calculated from 1 July 2005, with the exception of the interest incurred before this date. Luxembourg, which wanted a less restrictive interpretation on these two points, will only be in the right on the second. The directive 2003/48/EC aims to reduce tax fraud and double taxation. It will tax income from savings from physical persons according to the rules of the state where these people have their tax residence, whatever the Member State in which they made their savings deposits. As of 1 July 2005, savings income will be liable to taxation in the form of interest payments in the State where the savings are made. All Member States will introduce an information exchange system on the payment of interests carried out by paying agents (banks, investment funds) established on their territory to natural persons established in another Member State.
Austria, Belgium and Luxembourg enjoy a transitional period during which they will apply withholding at 15% during the first three years, 20% during the next three years and 35% thereafter. They will transfer 75% of receipts from this withholding to the natural person's country of residence for fiscal purposes. Enforcement of Directive 2003/48/EC is subject to implementation of equivalent agreements in the five third countries cited above and in the dependent or associate territories of the United Kingdom (Guernsey, Jersey and Isle of Man and five British territories in the Caribbean) and the Netherlands (Dutch Antilles and Aruba).