Council Directive 2003/48/EC of 3 June 2003 on taxation of savings income in the form of interest payments

Further information:

The aim of the Directive is to enable this interest paid in one EU country to individual residents for tax purposes in another country (beneficial owners), to be made subject to effective taxation in accordance with the laws of the country.

The scope of this Directive is limited to taxation of savings income in the form of interest payments on debt claims, to the exclusion of the issues relating to the taxation of pension and insurance benefits. At territorial level, the Directive applies to interest paid by a paying agent, i.e. an economic operator (for example, a financial institution, a bank or an investment fund) which pays interest or secures their payment to beneficial owners, established in the territory of the EU. Any such entity established in an EU country to which interest has been paid or secured for the benefit of the beneficial owner is considered a paying agent within the meaning of the Directive. This way the paying agent is the last link in the chain of intermediaries that pays interest directly to the beneficial owner.

As part of the tax package aimed at combating harmful tax competition, the EU adopted a Directive in 2003 to reduce existing distortions in the effective taxation of savings income in the form of interest payments.