The European Union Savings Tax Directive (EUSTD) came into effect on 1 July 2005 and applies to all EU member states. The EUSTD applies to an individual who is resident in an EU country and has interest paid to him in another member or participating state. It provides for automatic exchange of information on interest payments. That means any bank interest paid to a UK tax resident anywhere in Europe gets reported to HMRC in the UK – even for people who are not-domiciled in the UK.
Most Dependent and Associated territories (e.g. the Channel Islands) plus Andorra, Liechtenstein, Monaco, San Marino and Switzerland have all adopted similar rules, as have. Singapore, Hong Kong and Barbados did not participate. It was agreed that as an interim measure that Austria, Belgium, Luxembourg and some non-EU countries (e.g. Switzerland) instead had the option of deducting a withholding tax (currently set at 20 percent: 2009) instead of automatically reporting the interest paid. They are not excused from any other reporting requirements outside the EUTSD.
On 13th November 2008 the Commission announced that it was amending the EUSTD in an attempt to close loopholes and eliminate tax evasion. The amendments extend the responsibilities of paying agents (e.g. banks) in respect of so-called intermediate structures established outside the EU and of certain EU trusts and foundations. A key measure is the introduction of the concept of “beneficial owners” of offshore companies and trusts. For instance if a Panamanian or Liechtenstein Foundation (settled by UK tax residents) has a bank account in the Isle of Man then the interest would be reportable under the Directive. The scope of the EUSTD is also extended to certain payments not constituting interest. The amendments have to be applied by Member States within 3 years of them coming into force.
On 2nd February 2009 the Commission adopted 2 measures for new Directives to improve and increase “mutual assistance” between Member States’ tax authorities in the assessment and the collection of taxes. As a result Member States will not be able to cite banking secrecy in order to refuse cross-border cooperation.
If you are concerned about an offshore bank account or offshore assets, or have any historic tax liabilities that are worrying you, or think the Tax Amnesties may benefit you: then Lynam Tax Enquiry Experts can help. Call today for a confidential, discreet discussion with our experienced Tax Investigation Specialists.
Call Paul Lynam now on 0845 643 9997