Global Tax Alert | 13 March 2014

Proposed revisions to EU Savings Tax Directive are "very near" to being agreed

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The European Commission’s (EC) proposals to amend the European Union Savings Tax Directive (EUSD) were again on the Economic and Financial Affairs Council (ECOFIN) agenda for their meeting of 11 March 2014. However, ECOFIN was unable to reach political agreement on the proposals. Nevertheless, Commissioner Šemeta released a post-meeting positive statement that noted that ”it is clear we are very near the finishing line.” The statement further noted his confidence that the EU leaders will endorse the EUSD before the end of the month.

The proposed amendments represent material changes in scope to the EUSD as payments to legal entities and payments of interest equivalents will be brought within the regime.1

Prior to the meeting, the EC released a Frequently Asked Questions document covering the EU savings taxation rules and savings agreements with third countries. Of particular interest is the explicit statement that ”the EU will align both the Savings Directive & the Directive on Administrative Cooperation with the [OECD’s plans for a global standard for automatic exchange of information between tax administrations], well in advance of implementation.”2

This is broadly good news for financial institutions as it will provide a level of consistency across the regulatory landscape and should, therefore, reduce the compliance burden while still obtaining the required objectives. Financial institutions should continue to monitor the progress of these plans and focus on how alignment will be realized. This will be crucial in determining whether parallel customer identification and reporting processes are required to run alongside any Common Reporting Standard obligations.

Endnotes

1. For a detailed discussion of the proposals, see EY Global Tax Alert, Proposed revisions to EU Savings Directive fail again to be approved, issued 12 December 2013.

2. For additional information, see EY Global Tax Alert, OECD releases Common Reporting Standard, issued 20 February 2014.

For additional information with respect to this Alert, please contact the following:

Ernst & Young LLP (United Kingdom), London
  • Paul Radcliffe
    +44 20 7951 5816
    pradcliffe@uk.ey.com
  • Nigel Nelkon
    +44 20 7951 6011
    nnelkon@uk.ey.com
  • Julian Skingley
    +44 20 7951 7911
    jskingley@uk.ey.com
  • Rod Roman
    +44 20 7951 1549
    rroman@uk.ey.com
  • James Guthrie
    +44 20 7951 4366
    jguthrie@uk.ey.com
  • Peter Frost
    +44 20 7951 5517
    pfrost@uk.ey.com
  • Stuart Chalcraft
    +44 20 7951 1190
    schalcraft@uk.ey.com
  • Jeff Soar
    +44 20 7951 6421
    jsoar@uk.ey.com

EYG no. CM4258