EU SAVINGS TAX DIRECTIVE

The European Union Savings Tax Directive (EUSTD) is an agreement between the EU Member States to automatically exchange information with each other about individuals who earn savings income in one EU Member State but reside in another. It was approved by the EU Council of Ministers and came into effect on July 1st, 2005. The European Union withholding tax is deducted from interest earned by European Union residents on their investments made in another Member State. Its aim is to ensure that citizens of one Member State do not avoid taxation by depositing funds outside the jurisdiction of residence. The rate of tax is currently at 15% of the interest earned. The tax is withheld at source and passed on to the EU country of residence without any disclosure as to who was actually the recipient of the interest concerned. This article addresses the following questions, who must abide by the EUSTD?, How much tax will I have to pay under the withholding tax regime and will the directive affect my income?, Does this tax affect a non-EU national living in the EU?, How does the Directive affect trusts and trustees? And Do partnerships come within the scope of the directive?

The following questions have been addressed in this article:

Are all individuals and accounts affected by the EU tax?
How much tax will I have to pay under the withholding tax regime and will the directive affect my income?
Does this tax affect a non-EU national living in the EU?
How does the Directive affect trusts and trustees?
Do partnerships come within the scope of the directive?

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