EU Orders Review of Savings Tax Directive

On the anniversary of the taking effect of the European Union’s saving tax directive, Laszlo Kovacs, EU Tax commissioner, has ordered a review of the operation of the directive to see whether it needs to be amended. The directive allows participating countries to impose a withholding tax on foreign savings of EU residents after subtracting a 25 percent fee for administrative expenses, or exchange information on savings with national authorities. Figures for the directive’s first six months of operation show that Switzerland obtained only €100m in withholding taxes on savings held there by EU citizens. Revenue collected by other international financial centers in the EU was also comparatively low. Luxembourg obtained only €48m; Jersey, €13m, Belgium, €9.7m, Guernsey, €4.5m, and Liechtenstein, €2.5m. Switzerland deducted 25 percent of monies collected for administrative costs pursuant to the EU directive, and then sent €76m to EU members. Italy received the most revenue – €20m in tax retained, followed by German with €15m.