The EU Savings Tax Directive was formally adopted by member states on 24 March 2014, following a European Council agreement reached on 20 March say Harris & Co accountants Northampton
The directive requires the member states to exchange information automatically so as to enable interest payments made in one member state to residents of other member states to be taxed in accordance with the laws of the state of tax residence. It will enable member states to better clamp down on tax fraud and tax evasion.
The scope of the directive covers savings income and products that generate interest or equivalent income. It includes life insurance contracts, as well as a broader coverage of investment funds.
The revised directive will be part of the EU"s legislative structure for implementing the new global standard on automatic exchange of information.
The European Council, in December 2013, called for the amending directive to be adopted by March 2014. Member states will have until 1 January 2016 to adopt the national legislation necessary to comply with the directive.