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Abstract:
As part of a ‘tax package’ aimed at combating harmful tax competition, the European Community (now European Union) implemented a legislative instrument to allow for the effective taxation of cross-border interest payments, known today as the ‘Savings Directive’. However, what remained unregulated was the structure of tax levies on cross-border payments made from Member States into territories that are not part of the European Community. As a result, the European Community expressed its need to establish bilateral tax treaties with non-member state third countries and territories associated with the United Kingdom and the Netherlands. This move has produced conflicting schools of thought. On the one hand, the European Community has an interest in maintaining common policies with respect to taxes levied on cross-border payments made within its internal market. On the other hand, its regulation of taxes levied on cross-border payments to third parties has arguably set a precedent for an ‘external implied competence’ on issues that its Directives already regulate within the internal market. This article introduces this interplay scenario and studies the general impact of these treaties on the taxation of cross-border savings.
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