EU Savings Tax

The European Union Savings Directive (EUSD) was introduced in 2005 and is an agreement between the EU Member States to automatically exchange information between states about individuals who reside in one EU Member state but earn interest in another.

Under the exchange of information rules, all financial institutions in a EU country who make interest payments to individuals resident in another EU country are required, on an annual basis, to submit to the local tax authority information about interest paid to individuals. This information includes the name, address, date and place of birth of the account holder(s), together with the account number and the amount of interest earned in the previous tax year for each account holder. Each tax authority will in turn forward this information to the tax authority in the account holder’s country of residence.

Some jurisdictions, including Austria, elected to apply the EUSD but with additional transitional options including the application of a ‘retention’ tax on interest earned until full exchange of information was subsequently introduced by the jurisdiction. These jurisdictions also made provision for individuals to claim an exemption from the EUSD.

The Naqoda Withholding Tax Calculation Engine supports both the information exchange and ‘retention’ tax method.