18 July 2001

Commission Proposal on Taxation of Savings Income Directive

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The Commission presented a new proposal for a Directive aiming to establish a minimum of effective taxation of savings income in the form of interest payments within the Community. The following principles governing the proposed Savings Directive were agreed:

All member states will exchange information with each of the other states seven years after the date on which the directive enters into force.

Austria, Belgium and Luxembourg will exercise their option to operate the withholding tax during the transitional period.

The withholding tax to be applied by these three member states will be 15% for the first three years of the transitional period and 20% for the remainder of the period.

These three member states would transfer 75% of the revenue of the withholding tax to the member state of residence of the investor.

The scope of the directive will include interest from debt-claims of every kind and in particular income from domestic or international bonds, accrued interest realised at the sale, refund or redemption of such debt-claims, capitalised interest on zero-coupon bonds and similar products, income distributed by investment funds and capitalised interest from capitalisation funds in as far as such income or interest is attached to debt-claims.

To avoid market disruption for the duration of the transitional period, a ‘grandfathering clause’ will apply.

The ‘paying agent principle’ where by the last intermediary in any given chain of intermediaries who pays interest directly to, or secures the payment of interest for the immediate benefit of the beneficial owner should apply.

See also the press release for a short summary and the frequently asked questions

© European Commission