Liechtenstein Presents EU Withholding Tax Figures

by Ulrika Lomas, Tax-News.com, Brussels

06 July 2011

According to the Liechtenstein administration, the withholding tax levied on interest income paid to European Union (EU) taxpayers in the Principality amounted to around CHF9.6m (EUR7.8m) in 2010. This figure compares to approximately CHF14.4m (EUR11.7m) derived from the withholding tax in 2009, the administration states.

In accordance with the European Savings Tax Directive, which entered into force on July 1, 2005, and provides for the taxation of interest earned, the Principality of Liechtenstein imposed a withholding tax of 15% in the first three years on the interest income of EU investors. Since July 1, 2008, following a 5% rise, the increased withholding tax rate of 20% has applied.

As regards distribution of the withholding tax product, 75% of the sum is subsequently transferred to the beneficiary member states, while the remaining 25% is retained by the Principality.

The EU Savings Tax Directive also provides for an alternative to the levying of a withholding tax, namely the possibility of submitting a voluntary declaration of the interest payment to the investor’s EU state of residence. Therefore, the investor can elect either to pay the withholding tax on the interest earned or to inform the relevant tax authorities in their country of residence.

Citing figures of actual voluntary declarations submitted by investors resident in EU countries, the administration states that up until and including May 31, the number of individuals stood at 1,238, compared to 1,043 for the 2009 tax year.

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