EU Commission Welcomes Council Approval Of Savings Tax Directive
by Ulrika Lomas, Tax-News.com, Brussels
21 July 2004

The European Commission has welcomed a decision by the Council of Ministers to approve the agreement on the savings tax directive, allowing for the effective taxation of cross border savings income from July 1, 2005.

The Council originally adopted this Directive as part of a package of three measures to combat ‘harmful tax competition’ in June 2003, but postponed until the end of June 2004 its decision on whether the conditions had been met for the provisions of the Directive to be applied in the EU.

"I am delighted EU Member States have finally been able to agree after fifteen years of negotiations on the date of application of a Directive to ensure the effective taxation of savings income within the EU", commented European Commissioner for Taxation, Frits Bolkestein.

He added: "While the Directive will now start to apply six months later than originally planned, the agreement reached today represents a remarkable achievement for the EU."

The EU had initially intended the directive to go into effect on January 1, 2005. However, the adoption date was recently pushed back to allow sufficient time for Switzerland to ratify the ‘Bilaterals II’ treaties through its parliament.

The four key elements of this agreement with Switzerland will constitute the basis for the forthcoming agreements with other third countries, namely, Andorra, Liechtenstein, Monaco and San Marino.

The Commission has also confirmed that “all matters of substance” with the dependent and associated territories of the Netherlands and the United Kingdom have now been resolved, and model agreements have been drafted to allow for bilateral savings tax agreements between member states and each of these territories.

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