EU Savings Tax Directive

Let Expat Finance Direct help you through the EU Savings Tax Directive

From 1 July 2005 new legislation arising from the European Union Savings Tax Directive (EUSTD) came into force.

If you are an individual who is resident in an EU Member State, and earn bank interest or other savings income on deposits or investments held in another EU Member, or associated territories, you are likely to be affected by the EUSTD.

If this applies to you, then you face one of two issues: either, the disclosure of your investment information to your home country (this is referred to as the “automatic exchange of information option"), or the “withholding tax option".

Some jurisdictions previously regarded as tax havens or generally exempt from EU directives that have voluntarily agreed to conform to this directive include Belgium, Luxembourg, Austria, Switzerland, Jersey, Guernsey, and the Isle of Man.

Banks in these locations now apply an initial withholding tax of 15% on the interest paid to non-resident client accounts. The tax will increase to 20% in 2008 and to 35% in 2011.

The directive does not apply to accounts held within a company, a trust, or to some life assurance products designed for investment and regular savings. In addition, tax-efficient planning structures, such as an offshore portfolio bond fall outside the effect of the EU savings directive.

If you wish to reduce your exposure to the EU Savings Tax Directive by using financial solutions that fall legally outside the directive, please contact eustd@expatfinancedirect.com