-ECOFIN Council reached a Political Agreement on the Savings Tax Directive. Under this agreement the twelve Member States are due to implement automatic exchange of information concerning interest income derived from savings in another Member State from 1 January 2004, whereas Austria, Belgium and Luxembourg will apply a withholding tax on savings held by residents of other Member States - 15% from 1. January 2004, 25% from 1. January 2007 and 35% from 1. January 2010 - and share the revenue with the country of residence (handing over 75% and keeping 25%).
The Council agreed that the European Community should, on the basis of unanimity, enter into an agreement with Switzerland, that will apply the same rates of retention and withholding tax as Belgium, Luxembourg and Austria. The 35% withholding rate will remain also after Switzerland has adopted exchange of information on the OECD standard.
Switzerland will share the revenue of the retention tax and will accept the 75/25 division applied within the Community. However the revenue sharing provisions will only apply to the new retention tax and not the existing withholding tax.
The Council also agreed that the European Community should enter into similar agreements with Liechtenstein, Monaco, Andorra and San Marino.
Council document
Commission press release
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