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08Jun

Taxation of savings income: the EU Savings Directive will enter into force as from 1 July 2005

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Further to a consensus of the States that are stakeholders to the EU Savings Directive, the Ecofin Council gave a green light for the final implementation of the Directive as of 1 July 2005.

As you may know, according to the EU Savings Directive, 22 EU members agree to exchange information on non-residents’ savings income in the form of interest payments as from 1 July 2005. However, Luxembourg, Austria and Belgium will be allowed to keep their banking secrecy and to levy a withholding tax of 15% for a three years period as from 1 July 2005. This rate will rise to 20% as from 1 July 2008 and to 35% as from 1 July 2011.

Belgian source interest payments made to taxpayers who have their residence in another EU Member State will be affected by the EU Savings Directive. This may also affect foreign executive working under the special tax regime in Belgium. A new Royal Decree on this subject will be soon published.

Posted: June 8th, 2005