The EU Savings Directive (ESD): Taxation of Savings Income in the Form of Interest Payments (2003/48/EC, June 2003)

Abstract

This is a paper explaining the EU Directive on Taxation of inter-State interest on savings. It concerns situations where the savings of an EU resident are placed in another member-State. The majority of EU States would like information disclosure so that they can tax the income received according to their self determined rates, usually a part of the progressive income tax. They can also use the information to question how the depositor earned the money. Therefore, States which receive a lot of savings inflows would like to continue to do so and would like to offer confidentiality. They prefer to levy a withholding tax on interest paid and share in with the state of residence.