Proposal for a Council Directive repealing Council Directive 2003/48/EC

In 2003, the Council adopted a Directive on the taxation of savings income received in the form of interest payments (the Savings Directive). This Directive served two main purposes: avoiding distortions to the movement of capital and allowing effective taxation of interest payments made from paying agents established in one Member State to individuals resident in another Member State.

The Savings Directive facilitates the taxation of this type of interest payment in accordance with the laws of the Member State of residence of the individual receiving the savings income, by way of requesting automatic exchange of information on the interest payments being made to those individuals. The provisions of the Directive became applicable on 1 July 2005.

Following the first review of the Savings Directive, the Commission proposed a number of amendments in November 2008, with a view to closing existing loopholes and more effectively preventing tax evasion. The proposed amendments sought to improve the Directive by strengthening measures to ensure that interest payments were subject to taxation. The scope of the provisions on intermediate structures was therefore extended. The proposal also extended the scope of the Directive to income from instruments equivalent to debt instruments, i.e. innovative financial products and certain life insurance products.

The amendments were adopted by the Council under Directive 2014/48/EU of 24 March 2014 (the Amending Savings Directive). Article 2 of this Directive stipulates that Member States must adopt and publish the laws, regulations and administrative provisions necessary to comply with the Directive by 1 January 2016. Member States would be obliged to apply these provisions from 1 January 2017.

On 12 June 2013, the Commission proposed amendments to Directive 2011/16/EU on Administrative Cooperation in the field of Taxation. The main purpose of the proposal was to provide Member States with an appropriate EU-level legal basis for implementing the global standard on automatic exchange of information being developed by the OECD. The scope of the proposed Amending Directive is very broad, as it covers all types of financial products (with specific exemptions) held directly or indirectly by individuals or by “non-public” entities. This Amending Directive was adopted on 9 December 2014 – Council Directive 2014/107/EU (the Amending Directive on Administrative Cooperation). Article 2 of this Directive stipulates that Member States must adopt and publish the laws, regulations and administrative provisions necessary to comply with the Directive by 31 December 2015. They are required to apply these provisions from 1 January 2016 and to start exchanging information by September 2017.

In order to make sure that there is only one applicable standard for automatic exchange of information within the EU, and to avoid situations where two standards are applied in parallel, the Savings Directive should be repealed. In order not to leave any gaps in the reporting, the repeal of the Savings Directive needs to be well coordinated with the timing of the application of the Amending Directive on Administrative Cooperation.

EUR-Lex: COM(2015)129: Follow the progress of this proposal through the decision-making procedure http://eur-lex.europa.eu/legal-content/EN/HIS/?uri=COM:2015:129:FIN

ESO: Background information: Website: Taxation of savings income http://www.europeansources.info/record/website-taxation-of-savings-income/

---