TABLE OF CONTENTS

1........... Introduction.................................................................................................................... 3

2........... Functioning of the Directive............................................................................................. 5

2.1........ Ad-hoc report on the correct and effective application of the Directive............................. 6

2.2........ Questionnaire on the use of data.................................................................................... 10

2.3........ Statistics provided by Member States on the application of the Directive........................ 13

2.4........ Contributions from the expert group on the Directive ('EUSD' group)............................. 22

2.5........ Determination of the start-up and recurrent costs of implementation of the Directive:....... 24

3........... Economic effects and analysis....................................................................................... 26

3.1........ International deposits – BIS international locational banking statistics.............................. 26

3.2........ Euro-area deposits – ECB MFI statistics...................................................................... 41

3.3........ Switzerland – data from the Swiss National Bank (SNB)............................................... 50

3.4........ IMF Coordinated Portfolio Investment survey – Evolution of investments in debt securities 57

3.5........ Eurostat data – household savings/investment patterns................................................... 67

3.6........ Structured retail products.............................................................................................. 73

3.7........ UCITS Funds............................................................................................................... 78

3.8........ Insurance products....................................................................................................... 80

COMMISSION STAFF WORKING DOCUMENT

presenting an evaluation for the second review of the effects of the Council Direcive 2003/48/EC

Accompanying the document

REPORT FROM THE COMMISSION TO THE COUNCIL in accordance with Article 18 of Council Directive 2003/48/EC on taxation of savings income in the form of interest payments

1. Introduction

Art. 18 of Council Directive 2003/48/EC of 3 June 2003 on taxation of savings income in the form of interest payments (the "Savings Directive" or "Directive")[1] states that "The Commission shall report to the Council every three years on the operation of this Directive. On the basis of these reports the Commission shall, where appropriate, propose to the Council any amendments to the Directive that prove necessary in order better to ensure effective taxation of savings income and to remove undesirable distortions of competition."

2011 Report and the Commission Staff Working Document

This document has been prepared by the services of the European Commission for information purposes as an accompanying document for the second (2011) Report from the Commission to the Council on the operation of the Directive. This report commits only the Commission’s services involved in its preparation.

This document relies, in particular, on data provided on exchanged information/withholding tax as well as the answers from Member States to two questionnaires on the implementation of the Directive (i.e. from the perspective of the paying agent Member State) and the use of the data exchanged (i.e. from the perspective of the beneficial owner Member State).

The data have been sourced inter alia with the Bank of International Settlements (BIS), the European Central Bank (ECB), the Swiss Central Bank (SNB), the International Monetary Fund (IMF), Eurostat, and some private data providers for specific product markets as well as a report on administrative compliance costs commissioned to Deloitte. The data sources suffer from specific limitations and pose challenges in arriving at meaningful and robust conclusions. These limitations are outlined in the relevant sections of this document where the data sources are cited. In addition, the analysis of the data has attempted to make provision, whenever possible, for the effects of the financial crisis in 2008 and from the periods thereafter although this has not been possible for every data source.

The second report and this document's aims are not to identify any loopholes in the Directive since they were already identified in the report for the first review of the Directive (the "2008 Report")[2]. Such loopholes have been addressed in an amending proposal[3] adopted by the Commission on 13 November 2008 ("the Proposal") and the latest Council compromise text elaborated on the basis of the Proposal. Rather, the aim is to provide a more in-depth analysis of the implementation and functioning of the Directive and to analyse available evidence relevant to the issues addressed in the Proposal. The main findings of this document including the widespread use of offshore jurisdictions for intermediary entities and the growth in key markets that provide products comparable to debt claims reinforce the arguments for extending the scope of the Directive and the relevant agreements. The main findings of this document are reflected in the second (2011) Report from the Commission to the Council.

2008 Report and Amending Proposal

The 2008 Report covered the transposition and implementation of the Directive. It summarised the economic evaluation and recommendations contained in the Commission's services working document[4]. The changes identified to the Directive recommended in the 2008 Report were designed to clarify certain interpretational issues and to close loopholes. To that end, the Commission adopted an amending proposal[5] on 13 November 2008 to the Directive (the "Proposal") with a view to closing existing loopholes and better preventing tax evasion. The Proposal was accompanied by an Impact Assessment[6]. In particular, the Proposal seeks to improve on two major aspects of the Directive, i.e. to (i) better ensure the taxation of interest payments which are channelled through intermediate tax-exempted structures; and to (ii) extend the scope of the Directive to income equivalent to interest obtained through investments in some innovative financial products as well as in certain life insurance products.

The European Parliament supported the Proposal by its legislative resolution[7] on 24 April 2009 and the European Economic and Social Committee did likewise by its opinion[8] adopted on 13 May 2009. The Proposal is still under discussion at Council level, building on unanimous conclusions adopted on 2 December 2008[9] and on 9 June 2009[10].

The latest compromise text[11] is considered by the Commission to have received sufficient consensus from Member States to enable the commencement of negotiations with the 5 third European countries to update the Savings Agreements with them. On 17 June 2011 the Commission adopted a recommendation to start negotiations with these third countries to bring the EU Savings Agreements in line with the amendments to the Directive. The recommendation was presented at the ECOFIN Council on 12 July 2011.

2. Functioning of the Directive

The aim of the Directive is to enable savings income in the form of interest payments made in one Member State to beneficial owners who are individuals resident in another Member State to be made subject to effective taxation in accordance with the laws of the latter Member State. To that end, the Directive's focus is to act as an incentive to compliance, that is to increase the reporting of interest income falling under the Directive in the fiscal returns of taxpayers in the EU and to provide an information source for EU tax administrations to be used in specific controls and audits on taxpayers, usually on the basis of a risk assessment.

In order to assess the functioning of the Directive, the Commission services have relied on the following material, which forms the basis of this document and the second report:

(2.1) Ad-hoc report on the correct and effective application of the Savings Taxation Directive (SEC (2011)775 final[12]);

(2.2) Results of a questionnaire sent to tax administrations on the use of the data under the Directive, complemented by a discussion at the meeting of the Commission expert group on Administrative Cooperation in Direct Taxation[13] of 28/09/2011;

(2.3) Analysis of the evolution of statistics provided by the Directive;

(2.4) Update of the contributions of the experts in the EUSD group for the second review of the Directive;

(2.5) An independent study commissioned to assess the administrative burden on paying agents as a result of the Directive.

2.1. Ad-hoc report on the correct and effective application of the Directive

In order to analyse in detail the transposition of the Directive, the Commission drafted a detailed questionnaire consisting of 38 questions about the measures taken by Member States to ensure the proper functioning of the Directive in their respective territories and about their experience of how the agreements with non-EU countries and territories were functioning.

As a detailed description of the answers to each question would not be within the scope of this Report, the replies to the questions are grouped by general topics and are summarised below.

Identification of paying agents

This topic was covered by four questions and deals mainly with the criteria for a paying agent to fall within the scope of the reporting obligations under the Directive, i.e. what determines where a paying agent is "established". To this end, 9 Member States stated that the place of effective management was partially or exclusively relevant, while 7 Member States regarded as "established" only those legal persons duly registered/incorporated in their territory and another two Member States relied on the place where the business activity is conducted as a relevant criterion. In addition, 17 Member States confirmed that persons resident abroad are also treated as paying agents if they have permanent establishments in their territory. In the reverse scenario, i.e. reporting obligations of foreign branches, most Member States' implementing texts would treat these as outside the territorial scope of the Directive. Only one Member State has specific provisions covering such situations and 7 Member States would cover these by other general provisions, the Anti-Money-Laundering obligations, anti-abuse clauses or interpretation.

With regard to the "establishment" of trusts/trustees the replies revealed that there are many interpretational issues about how trusts should be treated under the current text of the Directive and about the legal requirements to be fulfilled to act as a trustee in civil law countries. There seems to be a significant level of inconsistent treatment between Member States. Some countries reported that a trustee can be a paying agent if acting in a business or professional capacity and the beneficiary of the trust is absolutely/immediately entitled to assets/income. Regarding structures that are neither individuals nor legal entities, almost all Member States confirmed that these would be within the scope of the Directive, while only 3 Member States stated that their implementing rules do not contain specific provisions for economic operators other than legal persons and individuals.

It must be noted that the Proposal contains provisions meant to eliminate the above mentioned problems, especially for the more controversial cases of entities and legal arrangements falling under Article 4(2) of the Directive. The criteria for the place of effective management of entities or legal arrangements are detailed extensively.

Beneficial owners

Five questions on beneficial owners' issues deal with the interpretation of situations where the individual receiving the interest payment provides evidence that the payment is not received or secured for his own benefit. 4 Member States provided details on the type of evidence used if an individual claims to have received the interest payment on another’s behalf and 2 Member States cited specifically the Anti-Money Laundering Directive[14], while most Member States outlined principles rather than citing actual types of evidence.

The question on situations where an individual claims to have received the interest payment on behalf of a discretionary trust was meant for Member States whose implementing rules do not consider a trust to be a paying agent upon receipt under Art. 4(2). In 16 Member States, if the beneficiary is not known at the time the interest is paid, the trustee is treated as the beneficial owner. MT and UK did not provide explicit confirmations that non-resident individuals who are trustees of discretionary trusts are treated as beneficial owners under the Directive. Member States with extensive legislation on trusts did not provide explicit confirmation that non-resident individuals who are trustees of discretionary trusts are treated as beneficial owners under the Directive which may mean that no beneficial owner is identified in the case of discretionary trusts.

Again the above mentioned difficulties would be eliminated would the Council adopt the corresponding elements of the Proposal.

Identity and residence

The part of the questionnaire dedicated to the identification of beneficial owners and their residence considered separately contractual relationships entered into before and after 1 January 2004, as covered by Article 3 of the Directive.

For contractual relationships entered into before 1 January 2004 the paying agent would rely on the information at its disposal, in particular information to be collected in order to comply with the anti-money laundering obligations. One question was designed to investigate to what extent there is alignment with the customer due diligence obligations where an individual is identified as a beneficial owner of a customer that is a legal entity or a legal arrangement. The replies to that question were divergent with 9 Member States referring to specific obligations regarding the use of information available under the customer due diligence obligations. A second question also referred to the alignment with the customer due diligence obligations, but also sought to clarify whether a change of the permanent address for anti-money laundering purposes would also lead to a revision of residence for the purposes of the Directive. 6 Member States replied negatively to that question.

The use of information collected for anti-money laundering purposes is broadly extended and clarified within the Proposal.

The main question for contractual relationships entered into after 1 January 2004 concentrated on cases where the beneficial owner presents a tax residence certificate (or other official evidence) proving actual residence for tax purposes to be in a Member State, but other than that of the address on the passport or identity card. 4 Member States replied that they have no provisions to assign tax residence to the Member State that issued the tax residence certificate.

This issue is addressed in the Proposal prescribing that the paying agent must rely on recently issued tax residence certificates from other Member States.

Residual entities/paying agents upon receipt

While the situation of an economic operator who pays interest to a beneficial owner appears to be understood and applied correctly across the board by Member States and economic operators, this may not necessarily be the case for the provisions on the ‘paying agent upon receipt’[15]. The main questions in that regard referred to the fulfilment of the conditions for exemption from the paying agent upon receipt provisions. 6 Member States provide guidance of a varying detailed and binding nature for demonstrating the fulfilment of these conditions.

An additional question requested further information on the second residual entity test - whether the entity’s profits are taxed under the general arrangements for business taxation (‘subject-to-tax test’, Article 4(2)(b) of the Directive). Two different solutions have been retained by Member States in regard to this test. According to the first solution, the test is passed (i.e. the entity is not a residual entity) even if the entity’s profits are not taxed at entity level but are taxed at the beneficial owner level[16]. Under the second solution, the entity whose profits are not taxed through the entity itself but via its beneficial owners would not pass the subject-to-tax test and would have to be treated as a ‘paying agent upon receipt/residual entity’ by the upstream economic operator making an interest payment to it. The first solution is shared by 5 Member States.

The subject-to-tax test is also applied differently in situations where the entity is being subject to tax under the general arrangements for business taxation, but that taxation is at a zero or very low rate. The entity would still be considered subject to tax in that case according to the solutions retained by 11 Member States.

The provisions for entities and legal arrangements falling under Article 4(2) of the Directive are extensively detailed in the Proposal, specifically referring to the taxation at the level of the entity/legal arrangement and addressing the cases of zero rate taxation or the lack of effective taxation. The annex of indicative lists for such entities/legal arrangements under the Proposal and the corresponding latest compromise text is also another aspect bringing more clarity to such situations.

Definition of interest payments

The questionnaire referred to the application of the concepts of substance over form and abuse of law with regard to the definition of interest in the application of double taxation treaties[17] and asked whether the same concepts are applied when implementing Article 6 of the Directive. It also asked whether there is a list of products that could potentially be re-classified as interest-producing debt claims. Either substance over form or abuse of law is used by 16 Member States in the application of the Directive, but none of those Member States have a list of products or examples that could potentially be re-classified as interest-producing debt claims.

The Proposal includes a number of additional types of products which could be viewed as similar to debt claims from an economic perspective.

Supervision of paying agent obligations

The questionnaire dealt extensively with the issue of the proper supervision of paying agent obligations by the relevant tax authorities of the Member States of establishment of those paying agents. When the replies to these questions are summarised, the general conclusion is that all Member States have introduced significant safeguards to ensure the correct implementation of the Directive. The approaches range from inducing compliance by way of cooperation with paying agents to imposing relevant penalties and sanctions in cases of non-compliance.

The conciseness of some replies did not allow the construction of a full and consistent picture of the actual audit procedures with regard to paying agents. The Commission encourages Member States to actively engage and cooperate with each other in order to strengthen and build best practices in their audit procedures.

Agreements with non-EU countries and territories

The final set of questions concentrated on the application of the EU savings agreements with each of the five non-EU Western European countries and the bilateral agreements between the Member States and each of the 10 dependent and associated territories. In their replies, 9 Member States raised issues with one or more of these agreements. 5 of these Member States referred specifically to the format of information exchanged with some non-EU countries and territories.

Conclusion

The replies to the questionnaire suggest that some Member States interpret certain provisions of the Directive differently. Some of the risks of differing interpretations thus highlighted had already been identified in the 2008 Report. These problems would be removed through the corresponding new rules contained in the Proposal.

2.2. Questionnaire on the use of data

A questionnaire was sent to Member State experts in the Administrative Cooperation in Direct Taxation (ACDT) group13 in July 2011 regarding the use of the data provided by the Directive by Member States. A meeting was held on 28 September 2011 which examined the responses to the questionnaire. All Member States had replied to the questionnaire by the date of this meeting apart from Ireland and Romania. The meeting also called on earlier work of the Group which examined the operation of exchange of information and withholding tax mechanisms of the Directive for the fiscal years 2009, 2008 and 2007.

The Commission assists in facilitating the transmission of data between Member States under the automatic exchange of information provisions of the Directive. Member States should then decide on the processes and application tools, according to their own national requirements, in order to make best use of this data for helping to ensure that the relevant interest payments are subject to effective taxation in accordance with their laws. The replies from Member States to the questionnaire demonstrate that there is scope for Member States to learn best practice from one another both in the transmission of data and in its use.

Questionnaire on the use of data

Question 1) asked whether Member States were aware of any tax audits having their origin in the information on their tax residents received from other Member States under the Directive. The majority of Member States use the information obtained from the Directive in order to perform specific audits on taxpayers. However, the extent of these audits varies between Member States. Some Member States, including AT, BE, DE and HU have provided statistics on the number of audits while most Member States report that audits have been carried out but are not aware of the number or of the results.

The structure set up by Member States to use the data exchanged under the Directive will naturally depend on the resources available and the amount of data they receive under the Directive. Italy has reported that it has a savings directive database which is used by its Regional Directorates and has set up a dedicated working group at central level to facilitate use of the data. For the UK, the data feeds into its system for evaluating risk for audit purposes.

From the replies, it would appear that a structured process of the dissemination of data from the receiving unit to the tax collections services in the Member State, and the latter's service feedback on the use of data, could improve the efficiency of the use of data to target specific taxpayers.

Some Member States have confirmed that they import the received data directly into their national tax databases for verification purposes. The integration of a savings directive database with the national tax database can lead to a more efficient processing and monitoring system to ensure that the beneficial owners are correctly registered as taxpayers and to determine whether their savings income has been correctly declared.

In addition, the development of risk management and a more automated process of cross-checking the data should be encouraged to limit the need for costly investigations of individual taxpayers.

Question 2) asked Member States about the quality of data received under the Directive from other Member States, including the percentage of the data received which cannot be used at all for tax assessment due to its poor quality. This process would be after the Member State receiving the data had attempted to complete or rectify the data by themselves. Member States were then asked whether they had received a higher share of unusable data from certain Member States and if yes, whether they had informed the Member State concerned and what had been the reaction.

There is a wide variation reported by Member States of data that cannot be used due to its poor quality. Further investigation on this variation is needed but the possibility of a better registration of the Tax identification number (TIN) with which to identify the taxpayer has been highlighted by Member States as a major factor for improving the quality of the data received. If such a number is properly reported by the paying agent, the tax administrations of Member States can then easily identify the beneficial owner. By default or for countries where no TIN exists, the date and place of birth must be correctly reported. If these essential elements are not properly reported by paying agents, Member States face difficulties in identifying the beneficial owners. To help paying agents to better identify a TIN on an official document, the Commission is developing an online checking system for TIN that will be available on the EUROPA website together with samples of official documents with which to identify the TIN.

Most Member States did not report any specific Member State from which they receive a high percentage of files which could not be processed due to the poor quality of data and stated that this varied from year to year and from Member State to Member State. Furthermore, most Member States have not contacted the corresponding Member State as a result of the poor quality of data received. These replies would tend to indicate the need for more regular bilateral follow-up between Member States which could be undertaken to improve the quality of data received.

For the period under review, the Member States have highlighted a clear improvement in the quality of data received under the Directive that they attribute to the structured format and common rules of procedures under which the data are reported. By comparison with exchange of information under bilateral treaties, the quality of the data received under the Directive is significantly higher.

Since the first feedback of exchange of information in 2006, the Commission has repeatedly advised Member States tax administrations to organise upfront quality checks of data submitted by paying agents before sending them to the receiving Member States, including reminding paying agents of their obligations under the Directive to provide complete and correct information. Around half of the Member States conduct checks on the content of the information received from paying agents. Such checks should be made systematically, bearing in mind that many Member States indicated that they prefer to receive incomplete records rather than no records at all as this would in any case allow them to try to match these records with their own national database.

In order to facilitate the transmission of data by paying agents to their tax authorities under the Directive, the Commission could consider, if Member States so wish, using a central web-based application for paying agents to download the standard FISC 153 format using a common character encoding for exchange of information under the Directive. This application would be the one that will be developed in future for eForms for the implementation of the new Directive[18] on Administrative cooperation in the field of (direct) taxation (Council Directive 2011/16/EU of 11 March 2011) and would provide the following advantages: an on-line application with built in controls on the input of data; very low implementation costs for Member States; no deployment would be necessary; and maintenance could be simplified and centralised at Commission level.

Question 3) asked Member States whether they were aware of cases where the information received under the Directive has lead to investigations on the sources of the underlying funds even where the income tax on the interest payment concerned was not substantial or the income thereof was exempt and if so to provide details.

Most Member States replied that they had not used this data for this purpose or are not aware of the results given that it is part of the general audit process of taxpayers, as commented by them for question 1) of the questionnaire. However, even for those Member States who replied that the use of the data from the Directive was not relevant to their country as interest income is not taxed[19], this data would nevertheless be of use to tax administrations for identifying assets held abroad.

Question 4) asked whether the certificate procedure under Article 13(1)(b) provided any useful information for tax assessment and collection. Most Member States replied that they had not used this for tax assessment. This was reinforced by the comments in the ACDT meeting of 28 September 2011 which indicated that Member States preferred other sources of information for tax assessment or that few certificates had been issued by their tax administrations. The Proposal addresses this issue and no longer provides an option for the Member State of the paying agent to allow only the certificate procedure to be used for exemption from the withholding tax under the transitional regime of the Directive.

Question 5) addressed a similar issue by asking whether the certificate under Article 13(2) was issued by the central office or by the local office which is responsible for dealing with the assessment of personal tax due by the taxpayer requesting it. If issued by a central office, it was asked to the Member State to explain how would its local office which is responsible for that taxpayer be informed about the issuance and the detailed content of the certificate. The replies indicated that the certificate was issued in most Member States by the local office. When it was issued by the Central office, Member States had a system in place to inform local offices about the issuance of the certificate.

Question 6) asked whether Member States had any evidence that the introduction of the Directive has led to better compliance by their taxpayers in the recording of interest payments coming within the scope of the Directive (i.e. interest income received from abroad actually reported in fiscal declarations) and, if so, to provide details.

Although most Member States have not yet undertaken a quantitative assessment, those that have carried out an assessment have indicated positive compliance results. It appears nevertheless that the collection/control systems of Member States may not be able to provide them with information that is specific enough for income amounts falling under the Directive to gauge increased compliance.

Establishing criteria (for example the reporting of interest income earned abroad in the fiscal declaration) for measuring how far the Directive gets as an incentive to compliance, is crucial for measuring the effectiveness of the Directive, but also for the effectiveness of the validation/control procedures of the Member States. DK has provided an example of best practice by sampling the compliance of taxpayers for various source incomes, including that of the Directive, to assess its effectiveness. Given that Member States have data available to identify the taxpayer, that fiscal declarations ask taxpayers to record amounts falling under the Directive and that they know the population affected by the Directive, then Member States should be able to statistically assess the effectiveness of the Directive.

It would also be important for Member States to consider the use of indices or identifying benchmarks for gauging assets held abroad that give rise to the income being reported under the Directive through the use of national and EU statistics (refer to work done on the simulation exercise on ECB data performed in section 3.2 of this document).

Finally for Question 7) Member States were asked whether they had performed an analysis on the administrative costs borne by their tax administration for its obligations under the Directive including the data collection and exchange and also the costs of control for its correct application. If so, they were asked to provide the main results of any such studies.

Most Member States did not report any analysis on administrative costs due to the Directive. The Commission encourages Member States to make such an analysis in order to perform a cost/benefit analysis and to exchange best practice with other Member States.

Conclusion:

Member States have expressed satisfaction with the overall system of automatic exchange of information provided for by the Directive to enable them to ensure that interest payments are effectively taxed. For the period under review, Member States have indicated a clear increase in the quality of data received that they attribute to the structured format and common rules of procedure under which the data is reported.

However, there is still some progress to be made in reporting by paying agents to their tax administrations notably by the correct recording of the TIN and/or the date and place of birth. There is also scope for Member States to work towards more effective use of the data through best practices. In particular, regarding the quality of data, Member States should consider the use of controls on data submitted by their paying agents to ensure that it is correct according to their obligations under the Directive.

2.3. Statistics provided by Member States on the application of the Directive

In the first review of the Directive, the analysis of statistics was limited to the second half of 2005 and 2006. At that stage the Commission had received 16 Member States' statistics for 2006 and 8 Member States' statistics for 2005. The report to Council suggested that this lack of data and the fact that definitions on data had not yet been agreed had restricted the analysis that the Commission could perform. The second review of the Directive includes the years 2007, 2008 and 2009 as well as updated data for 2005 and 2006.

In its Conclusions[20] of the meeting of 12/05/2008, the Council lists for the first time a set of statistics which could be used by the Commission services to assess the efficiency and effectiveness of the Directive. The Commission may thus quote data contained in those statistics in its report under Article 18 of that Directive, if it deems necessary for such an assessment. The statistics in question are the following:

· Amount of interest payments/sales proceeds between MS[21]: For the Member States exchanging information or availing of the voluntary disclosure provision (of Article 13(1) of the Directive), the amount of interest payments and sales proceeds within their territory subject to exchange of information (under Article 9 of the Directive), split by Member State. The amount of interest by type according to the categories of Article 8(2) of the Directive split by Member State.

· Withholding tax: Luxemburg and Austria (and Belgium until 31.12.2009) communicate the total amount of tax revenue shared from the withholding tax country, split by Member State of residence of the beneficial owners.

· Number of beneficial owners resident in other Member States, split by Member State, if this information is available to the authorities.

· Paying agents per sending Member State involved in the exchange of information or withholding tax.

In addition, there is also information about elements like reporting on Article 4(2) and certificates for exemption from the savings withholding tax.

Table (1) below shows the evolution of interest payments and sales proceeds reported by Member States using information exchanged and sent to other Member States. Data submitted for this review has increased significantly from the first review of the Directive. Furthermore, in the ACDT meeting of 28 September, Member States reported a high submission rate of data from other Member States as stipulated in the working arrangements of the ACDT group. All Member States have submitted information to the Commission up to and including the fiscal year 2009[22], apart from Ireland that had technical problems in compiling the data for 2009, and Sweden which has not provided the Commission with the exchange of information data element since the inception of the Directive.

As with the first review, the largest economies provide the highest amount of information exchanged although in large financial centres like Luxemburg this figure has also been significant. Peak year for the exchange of information was 2007 when information amounting to EUR 38.9 billion was exchanged. The majority of this came from the United Kingdom (EUR 24.4 billion), which mostly related to information on sales proceeds reported under Article 8.2 (b) (EUR 23.4 billion) exchanged with Germany. In 2009, the total amount of information exchanged went down to EUR 9.9 billion with significant decreases in Luxemburg (down to EUR 1.6 billion from EUR 5.7 billion in 2008) and the United Kingdom (down to EUR 808 million from EUR 3.4 billion in 2008).

Table 1: Interest payments and sales proceeds reported by countries using information exchange* (million Euros)

EU Member States || || || 2005 (2nd half) || 2006 || 2007 || 2008 || 2009

Austria || || || n.a. || n.a. || n.a. || n.a. || 202,56[23]

Belgium || || || n.a. || n.a. || n.a. || n.a. || n.a.

Bulgaria** || || || n.a. || n.a. || 1,54 || 2,03 || 3,64

Cyprus || || || 5,26 || 15,05 || 25,41 || 32,39 || 35,62

Czech Republic || || || 2,92 || 17,81 || 26,75 || 24,49 || 14,50

Germany || || || 660,73 || 1392,06 || 942,09 || 761,75 || 1125,00

Denmark || || || -. || 415,31 || 693,10 || 168,94 || 164,91

Estonia || || || -. || 4,40 || -. || 1,34 || 0,89

Spain || || || 488,11 || 423,42 || 421,21 || 383,02 || 295,61

Finland || || || 26,02 || 60,93 || 7,80 || 18,13 || 3,49

France || || || 568,14 || 2020,04 || 2485,41 || 2495,89 || 1576,99

Greece || || || 6,85 || 23,11 || 19,46 || 25,21 || 13,98

Hungary || || || - || 5,22 || 6,60 || 11,13 || 20,56

Ireland || || || 258,88 || 771,00 || 1901,24 || 1403,27 || n.a.

Italy || || || 280,53 || 1615,92 || 1232,97 || 1913,71 || 3407,78

Lithuania || || || - || 0,09 || 0,18 || 0,37 || 0,47

Latvia || || || 0,18 || 0,65 || 1,38 || 2,12 || 1,93

Luxemburg || || || 1119,79 || 4188,68 || 6344,34 || 5650,77 || 1641,40

Malta || || || 1,02 || 2,10 || 1,73 || 4,75 || 2,68

Netherlands || || || 107,83 || 800,14 || 389,14 || 408,06 || 481,18

Poland || || || 0,00 || 15,40 || 10,05 || 5,57 || 7,38

Portugal || || || - || 0,56 || 5,18 || 17,68 || 21,12

Romania** || || || n.a || n.a. || 7,34 || 10,75 || 22,39

Sweden || || || - || -. || -. || -. || -.

Slovenia || || || 0,59 || 1,35 || 1,48 || 3,07 || 37,93

Slovakia || || || 1,87 || 4,76 || - || 8,25 || 3,25

United Kingdom || || || 9132,49 || 485,38 || 24425,01 || 3356,86 || 808,29

Total || || || 12661,21 || 12263,40 || 38949,40 || 16709,55 || 9893,52

Third Countries || || || || || || ||

Switzerland || || || 70,50 || 549,12 || 500,89 || 516,80 || 444,30

Dependent and Associated Territories || ||

Anguilla || || || -. || - || - || - || -

Aruba || || || 0,01 || 0,09 || 0,18 || 0,24 || 0,12

Guernsey || || || - || - || - || 775,95 || 148,90

Jersey || || || - || - || - || 410,61 || -

Cayman Islands || || || 8,81 || 18,02 || 25,55 || 17,48 || 8,78

Netherland Antilles || || || - || 0,05 || - || 0,09 || 0,63

Montserrat || || || - || - || - || - || -

|| || || || || || ||

*Amount of interest payments and sales proceeds under Art. 9 subject to exchange of information/ voluntary disclosure, (Beneficial owners and residual entities) ||

**Bulgaria and Romania joined the EU in 2007 therefore no data is available for 2005 and 2006. ||

In analysing the data, one cannot just compare the overall amounts of information to be exchanged, for example the drop in information exchanged from 2008 to 2009, to verify the effectiveness of the Directive. Rather, account should be taken of a number of factors discussed below which include interest rates on deposits, maturities, the cross-border deposit base, and the relative weight of sales proceeds compared to interest income reported under the Directive.

A noticeable feature of the data is the high variability of amounts reported by Member States. The principal reason for the variation is that table (1) includes both interest income and sales proceeds. The amounts of sales proceeds may be reported as the gross proceeds from the sale in one year and as net gains in another year leading to a different basis of comparison. This effect also applies if gross income received from UCITS distributions are used in one year and only the interest element of those distributions is used in the following year. In order to mitigate the possible effects outlined above, table (2) below has been refined to detail only the interest income elements reported by Member States (Article 6 (1) (a) and (c)). This is derived from the national statistics supplied by Member States (reporting table 2.1 and, where possible, table 3) which relate to amounts of interest payments subject to exchange of information and voluntary disclosure under Article 9 of the Directive split by residence of the beneficial owner.

Table (2): Information exchanged on interest payments sent by Member States to other EU Member States, fiscal years (million Euros) – Bulgaria and Romania joined the EU in 2007 therefore no data is available for 2005 and 2006. n.a. – not applicable.

Member State || 2005 (2nd half) || 2006 || 2007 || 2008 || 2009

AT || n.a. || n.a. || n.a. || n.a. || 47,6823

BE || n.a. || n.a. || n.a. || n.a. || n.a.

BG || n.a. || n.a. || 1,42 || 2,03 || 3,64

CY || 5,23 || 15,01 || 25,44 || 32,39 || 35,61

CZ || 2,92 || 7,82 || 9,68 || 11,52 || 8,33

DE || 109,08 || 181,82 || 158,14 || 196,48 || 287,70

DK || - || 119,90 || 124,90 || 51,26 || 58,37

EE || - || 4,40 || - || 1,34 || 0,89

EL || 6,69 || 22,83 || 19,46 || 25,20 || 13,98

ES || 224,25 || 198,86 || 273,30 || 256,21 || 220,91

FI || 26,02 || 60,93 || 7,80 || 2,86 || 1,85

FR || 41,1 || 113,55 || 123,63 || 149,88 || 123,78

HU || - || 3,72 || 3,06 || 7,07 || 17,10

IE || 131,14 || 426,96 || 795,36 || 290,5 || -

IT || 11,3 || 124,91 || 141,84 || 84,12 || 803,16

LT || - || 0,09 || 0,18 || 0,37 || 0,48

LU || 76,79 || 270,46 || 368,01 || 432,54 || 102,83

LV || 0,17 || 0,64 || 1,32 || 2,12 || 1,93

MT || 1,01 || 2,10 || 1,73 || 4,62 || 2,65

NL || 88,08 || 789,42 || 200,30 || 232,98 || 236,73

PL || - || 7,28 || 10,05 || 5,57 || 7,37

PT || 2 k || ,56 || 3,74 || 16,93 || 20,22

RO || n.a. || n.a. || 7,31 || 10,75 || 22,14

SE || - || - || - || - || -

SI || 0,6 || 1,35 || 1,48 || 3,07 || 37,54

SK || 0,95 || 4,52 || - || 7,76 || 2,53

UK || 293,63 || 293,90 || 1.282,93 || 562,69 || 259,39

Total || 1.018,96 || 2.651,03 || 3.561,08 || 2.390,26 || 2.316,81

While 2009 with EUR 2.3 billion in total interest payments reported has a very similar amount to the total reported in 2008, the differences in individual Member States from one year to the next are significant. The decrease in interest payments reported could be due to a change in the interest rate that households receive on deposits. Table 3 below provides an overview of the interest rates over the period 2005-2009 for euro-area Member States and the UK:

Table 3 Evolution of interest rates for household deposits (source: ECB)

|| 2005 || 2006 || 2007 || 2008 || 2009

Euro (interest rate over all maturities || 2,42% || 2,54% || 3,04% || 3,58% || 2,84%

UK (interest rates maturities up to 2 years) || 4,59% || 4,52% || 5,29% || 5,59% || 3,87%

Interest rates have remained relatively stable until the end of 2008 when the financial crisis emerged after which interest rates on deposits fell significantly. Interest payments received by households also depend on the maturities of interest deposits within the respective years. Data from the ECB on deposits held by households in the euro-area has shown an increase in the share of overnight deposits[24] from 24,51% of total deposits in 2003 to 46,38% in 2011. This has largely been at the expense of the share of deposits with a maturity up to one year which have fallen from 47,37% in 2003 of total deposits to 25,55% in 2011. This would normally result in lower interest payments received due to the lower interest rate on overnight deposits compared to deposits with a maturity.

The evolution of interest rates should also be put in context with the evolution of cross-border deposits. Data from the ECB has shown that euro-area household cross-border deposits have been relatively stable in recent years peaking at EUR 287,4 billion in September 2008, before dropping slightly to EUR 280,7 billion in May 2011. Data for cross-border deposits of households outside the euro-area were not available.

The decrease in interest rates, if not the level of cross-border deposits, would tend to justify a lower amount of interest payments in 2009. However, for many of the Member States there is no correlation between this interest rate decrease and a decrease in the amounts of interest income reported. This could be explained by investors shifting to domestic deposits or investing in products outside the scope of the Directive but again, the level of stability of cross-border deposits at least for Euro households would tend to argue against this. In addition, Eurostat data (refer to section 3.5) does not provide evidence of a decrease in deposits held by households in the EU.

There has also been a high fluctuation from one year to the next in the number of paying agents reporting information to the tax administrations of their Member State, although for most Member States this has stabilised in recent years. Similarly, there is noticeable fluctuation from one year to the next of the number of beneficial owners reported by many Member States. Given the stability of cross-border deposits, one would have expected to observe more continuity in the number of beneficial owners reported by Member States under the Directive.

Separate work using the ECB figures (refer to section 3.2) on the completeness of interest payments being reported under the Directive according to cross-border deposits of households in the euro-area highlights the importance of Member States to make checks on the quantity of data submitted to them by their paying agents. Within the framework of the preparation of the ad-hoc report (section 2.1 of this document), Member States were requested to provide details on specific audits on paying agents regarding their reporting responsibilities and on the capacity of tax administrations to verify whether all income reported by paying agents under Article 6 (1) is complete. The replies by Member States indicated that most Member States rely primarily on the correct application of their guidelines by paying agents for the correct identification of relevant income to be reported, although they have provisions in place to perform audits and apply sanctions for non-compliance with the Directive.

It would be therefore beneficial for Member States to consider upfront controls on the data exchanged by paying agents. The following is a non-exhaustive list of possible controls that could be implemented to ensure the completeness of information exchanged under the Directive:

(i) Central register to be established by each Member States which lists paying agents established in their jurisdiction. This would ensure correct monitoring of the data supplied by paying agents is complete;

(ii) Examination of the data received by paying agents for completeness: variations of number of beneficial owners and amounts exchanged under the Directive should be compared from one year to the next and fluctuations investigated; comparison of interest income reported to the size of the bank (capitalisation) and the client base;

(iii) Cooperation between Member States in order to strengthen the audit procedures relating to paying agents including paying agents' systems and internal control guidelines;

(iv) the development of benchmarks and comparisons to other sources of data to ensure completeness of data – for example national statistics on the reporting of cross-border deposits.

Member States should continue their work in the ACDT group on how to improve the reporting of the income elements exchanged under the Directive. This work and the collaboration between Member States is important not just for this Directive but for the technical framework to be designed for automatic exchange of information to be provided by the new Directive[25] on Administrative cooperation.

In addition, it also appears that no data for residual entities (defined under Article 4(2)) has been submitted by a number of Member States. The 2008 Review has identified problems with the interpretation of this Article therefore verification should be undertaken by the Member States concerned to identify the reasons for non/under reporting of this data element.

Withholding tax:

Until 31.12.2009, 3 Member States levied a withholding tax on the interest income reported under the Directive: AT, BE and LU. Since 01.01.2010 BE has changed over to the exchange of information mechanism. In LU, beneficial owners have the option of (i) authorising voluntary exchange of information; or (ii) making use of the exemption certificate provided by their country of residence; or (iii) being subject to the levying of the withholding tax. Table (6) below gives details of the amounts of tax revenue shared on the basis of the 75% of the withholding tax transferred to the Member States of residence of beneficial owners :

Table 4: Tax revenue shared by countries with withholding tax regime (million Euros)

EU Member States || || 2005 (2nd half) || 2006 || 2007 || 2008 || 2009

Austria || || || 9,48 || 44,32 || 59,53 || 67,01 || 49,48

Belgium || || || 7,51 || 19,61 || 25,92 || -. || -a.

Luxemburg || || || 35,90 || 124,59 || 153,00 || 174,72 || 122,95

Total || || || 52,89 || 188,52 || 238,45 || 241,72 || 172,43

Third Countries || || || || || || ||

Andorra || || || 3,50 || 12,77 || 16,34 || 18,84 || 13,94

Liechtenstein || || || 1,94 || 7,08 || 9,06 || 11,30 || 7,17

Monaco || || || 3,75 || 11,70 || -. || -. || -.

San Marino || || || 1,13 || 7,47 || 10,75 || 15,40 || 14,02

Switzerland || || || 77,23 || 255,92 || 298,23 || 348,90 || 265,64

Total || || || 87,54 || 294,93 || 334,39 || 394,43 || 300,78

Dependent and Associated Territories || || || || ||

British Virgin Islands || || 0,00 || - || - || -. || -

Turks and Caicos || || || 0,01 || 0,02 || - || - || -

Guernsey || || || 4,93 || 16,83 || - || 14,24 || 5,51

Jersey || || || 13,26 || 32,15 || 38,34 || 33,55 || 9,94

Isle of Man || || || 13,26 || 20,35 || 23,39 || 16,89 || 7,12

Netherlands Antilles || || - || 0,05 || 0,15 || 0,08 || 0,11

Total || || || 31,47 || 69,39 || 61,88 || 64,76 || 22,67

Overall total || || || 171,90 || 552,84 || 634,73 || 700,92 || 495,87

Tax withheld under the Directive and the agreements providing for it has decreased from EUR 700,9 million in 2008 to EUR 495,9 million in 2009, although there has been a steady increase in the amounts withheld from the inception of Directive in 2005 until 2008. There is no analysis from the countries involved on why there has been a decrease, but it would seem likely that part of the reason would be the fall in interest rates in 2009. Switzerland contributed the most tax (53,57% of total) with Luxemburg being the next largest (24,8%). The benefit of aforementioned controls on completeness of information exchanged under the Directive could also be applied and adapted to the specifics of the withholding tax regime.

Concerning which Member States received the tax, Germany (41, 5%) and Italy (28, 96%) continue to be the Member States receiving the most of this revenue, which is explained by their size and proximity to major financial centres that operate the withholding tax mechanism.

Conclusion:

Information exchanged under the Directive peaked in 2007 with total of EUR 38.9 billion and has decreased to EUR 9.9 billion in 2009. However, further refinement of the data is needed, for example separating sales proceeds from interest payments and assessing the evolution of interest rates/maturities on cross-border deposits, in order to arrive at meaningful conclusions on the data exchanged. The variability of the data exchanged and the results of the ECB coverage analysis (section 3.2 of this document) indicate that Member States could benefit from better monitoring of the completeness of data submitted by paying agents.

2.4. Contributions from the expert group on the Directive ('EUSD' group)[26].

A group of business experts (Expert Group on Taxation of Savings "EUSD Group" - EUSD = "European Union Savings Directive") had been set up to assist the Commission's Services in their first review of the functioning of the Directive as provided under Article 18. Details of the contributions from the expert group for the first review can be found on the TAXUD website26.

On 17 February, 2011 a meeting of the Group took place concerning the second review of the Directive. In the meeting, the Commission outlined the elements to be contained in the second review, including the methodology to be used and data sources. Experts were asked to provide their feedback on the elements contained in the second review, to provide data input to facilitate the second review and to update, where appropriate, the comments they provided for the first review of the Directive. A summary of the responses is given below.

The contribution of EBF[27] related to its comments on the text of the Presidency compromise elaborated on the basis of the Proposal (version FISC 170 text[28]) and released on 25 November 2009. . The EBF has graded its comments according to their level of importance including the following which they deem as being very important:

Paying agents obligations (Art. 3 (2) (b)): the implementation date of the Proposal should be fixed to around 1 year after the Proposal enters into force including for the new products to be included in the scope of the Directive (life insurance/securities) under the Art. 6 definition of an interest payment. In addition, for contractual relations entered into, or transactions carried out in the absence of contractual relations, on or after 1 January 2004 and before the date referred to above, EBF recommends that the current text should be amended so that no TIN or equivalent is considered to be available when it was not on the passport or the official identity card or any other documentary proof of identity presented by the beneficial owner.

Tax certificates and residence (Art. 3 (3)): EBF is concerned about the burden put on paying agents to obtain a tax certificate for determining the tax residence of the beneficial owner.

Place of effective management and residual entities (Art. 4 (2)): EBF considers that economic operators, even those with a direct relationship with the payee, may not be able to determine the place of effective management, particularly where this is by reference to where the key management decisions are taken relating to the assets producing interest payments. Consequently, paying agents should be able to decide between the place of establishment or the place of effective management in Articles 2 (3) and 4 (2) of the Proposal.

Approval of data providers for implementing measures: Under Art. 18a (1), EBF are concerned about whether the Commission should have a role in "approving" data providers as stipulated in sub-paragraph (a). EBF proposes that the Commission and the relevant industry representative bodies might consider working together to produce an indicative list of approved data providers.

In its contribution, CEA[29] was concerned about the possible risk of the duplication of reporting requirements of the Proposal and the new Directive on administrative cooperation, Council Directive 2011/16/EU, in addition to the consequences for the competitiveness of the European insurance industry in comparison with non-EU financial centres. CEA considers that the Commission should wait until the new Directive on administrative cooperation25 has been implemented, in particular on the list of information to be exchanged under Article 8 of the Directive, before considering the new reporting requirements contained in the Proposal. CEA also considers that the new reporting requirements should have been included in the scope of the study to measure the start up and recurrent costs of implementation of the Directive (see following section 2.5). CEA also provided details on cross-border insurance premiums, which are given in Section 3.8 of this document.

EFAMA[30] stated that their comments submitted in July 2009 remain valid. They stressed the importance of achieving a level playing field between competing investment products like investment funds and certain insurance products which are marketed to retail investors and fulfil the same investment needs. In particular EFAMA considered that the Proposal did not achieve this aim by containing a grandfathering provision for insurance contracts issued before 1 July 2010. Secondly, EFAMA considered that the Commission should reflect on providing generally applicable guidelines for the new rules regarding insurance products that will enter the scope of the Directive. Finally, EFAMA provided data on the UCITS/non-UCITS ratio and the investment pattern of those (between debt and equity) details of which can be found in Section 3.6 of this document.

EFSA[31] confirmed its comments for the first review made to the Commission of the letters dated 24 April 2008 and 21 May 2007. EFSA also supported the comments, including the need for clarity and practicality in the Directive, made by EBF (see above). In order to maintain a level playing field with market operators in non EU jurisdictions, EFSA stressed that any tightening of the provisions of the existing Directive must at the very least be matched by corresponding tightening for the "equivalent measures" which are in place (Savings taxation agreements) in Switzerland, Liechtenstein, and the other "third countries" and dependent territories. According to EFSA the lack of a level playing field is already present with the Directive and related Savings tax agreements and EFSA is concerned that the Proposal might accentuate these effects. Secondly, any changes that are to be made to the Directive should ensure that adequate time is provided for Member States to draw up and to implement the necessary local fiscal rules in order to give paying agents sufficient time to implement the necessary system changes.

In its contribution, FECIF[32] provided a cost study on administrative burden among its members which indicated that 20% of their costs are taken up with legal, compliance and regulatory obligations including those linked to the Directive. Therefore, FECIF stressed the importance of ensuring that a disproportionate administrative burden is not imposed on paying agents by the Directive.

The aforementioned points and earlier comments of the Expert Group have been taken into account in the Council discussions on the Proposal.

EuroInvestors[33] proposed an expert who was nominated to the group in 2011. In order to safeguard the interests of investors, EuroInvestors suggests that the Directive should contain an obligation or at least a recommendation from the Member State of residence of the beneficial owner to grant full relief from double taxation by taking into account the taxes already paid in the country of the source of income. Secondly, there should be an obligation for paying agents to disclose, free of charge and in a timely manner, a spreadsheet detailing for each 'saving income' the withholding tax levied pursuant to the Directive. The Commission considers that both proposals do merit further consideration, but would not fit within the scope of the current Proposal.

2.5. Determination of the start-up and recurrent costs of implementation of the Directive:

An evaluation was produced by Deloitte and had the following objectives:

· Estimate the start-up and recurrent costs incurred on the implementation of the Directive according to the EU Standard Cost Model;

· Identify the most burdensome provisions in the current text of the Directive; and

· Summarise the feedback obtained from the economic operators on more cost efficient solutions that would retain and enhance the accuracy and integrity of the information exchanged, without undermining the objectives of the Directive.

The study focuses on the administrative burden incurred under the Directive by paying agents rather than the tax authorities. The latter were asked to provide their feedback to this for question 7) of the questionnaire on the use of the data (refer to section 2.2).

Essentially the study broke down the requirements of the Directive into 2 key IOs (information obligations):

IO1: based on article 8 (1) which requires the Paying Agent to report details on the Beneficial Owner and the interest payments to the competent authority; article 3(2) requires the Paying Agent to establish the identity of the Beneficial Owner: name, address, tax identification number or date/place of birth (by means of the ID card/passport); and article 3(3) which requires the Paying Agent to establish the residence of the Beneficial Owner.

IO2: based on Article 4(2) which requires paying agents to report the name, address and interest paid to 'residual entities' established in another Member State.

Results of the study:

In terms of the start-up and recurrent costs, the Directive is not considered to be particularly burdensome. For all EU Member States (apart from Austria, Belgium and Luxemburg), IO1 has been estimated at 114 million Euro per annum which represents 1,2% of the total interest payments/sales proceeds[34]. For Luxemburg, using a different method of extrapolation, the administrative burden was estimated at EUR 35 million. No extrapolation was possible for Belgium and Austria due to data limitations. It should be noted that these figures should be interpreted with caution due to the low participation rate of paying agents in the study. Nevertheless, the majority of respondents noted that the information needed to fulfil this obligation is already available to them under Anti-money laundering legislation14, domestic legislation or internal business practices.

For IO2, it was not possible to obtain data as most paying agents surveyed indicated that, due to their business model, all their clients were individuals. However, in terms of administrative burden, none of the respondents for which IO2 applies indicated that they would collect such information if not required to do so by the Directive.

In terms of the provisions for IO1, respondents reported that the most burdensome activities involve understanding the requirements of the Directive, training, and getting acquainted with the IO. In terms of products, classifying the proceeds from sales of UCITS income to see whether they fall within the provisions of the Directive are difficult to monitor as they are not business as usual costs and therefore bring a high administrative burden[35].

The report recommends that the provisions on the classification for UCITS and paying agent on receipt (IO2) should be clarified in order to reduce the administrative burden for paying agents. It should be noted that these points have already been taken up by the first review and are incorporated in the Proposal for the Directive by providing, for example, Annexes which list potential intermediary structures to be classified as look-through entities or paying agents upon receipt.

The report indicated that the cost for paying agents with a low number of Beneficial Owners were higher than for paying agents with a high number of Beneficial Owners primarily due to more automated processes for the latter and the lower recurrent costs per beneficial owner. It would therefore seem appropriate for paying agents to consider whether they can centralise the reporting of information under the Directive in order to take advantage of economies of scale.

Some respondents also noted it may be useful for Member States to consider streamlining different types of reporting for the same information (towards national authorities and for the purposes of the Directive) which could potentially reduce the administrative burden.

3. Economic effects and analysis 3.1. International deposits – BIS international locational banking statistics

Description

The International Locational Banking Statistics of the Bank for International Settlements (BIS) includes quarterly data on assets and liabilities of domestic banks and branches of foreign banks situated in the 43 reporting countries broken down on a bilateral basis according to the vis-à-vis[36] country of their foreign counterparts. The positions are reported on a gross[37] and unconsolidated[38] basis and in USD million.

The reporting countries include most OECD countries[39], several developing countries and some offshore financial centres[40]. From the financial centres reporting to the BIS that are part of the Savings agreements network, only Switzerland and Guernsey agreed to disclose their bilateral data through the BIS for the purpose of the Directive's review. None of the offshore financial centres[41] which are not part of the Savings agreements network agreed to disclose their bilateral data.

A breakdown of the data by instrument, currency, sector, country of residence of counterparty, and country of the reporting banks is available. The breakdown by instrument provides details for principal items of international assets (loans) and liabilities (deposits) that are not represented by negotiable securities. These loans and deposits reflect both interbank positions and inter-office/branch balances. The sectoral breakdown includes the international positions with non-banks as an "of which" item, which allows a separate analysis of non-bank balances. Non-bank balances would include any non-bank borrower/depositor, i.e. non-bank financial institutions, non-financial companies, individuals and other entities[42].

In addition, fiduciary/trustee businesses, i.e. funds received by banks on a fiduciary basis and re-deposited on the banks' name but on the account of the depositor, are included in the balances of liabilities and assets respectively.

Studies that use the data

In Johannesen (2010)[43], based on BIS data, the author estimates the effect of the entry into force of the EU-Swiss Savings Tax Agreement[44] on Swiss bank deposits held by EU residents. The Swiss bank deposits held by EU residents are used as a treatment group, while the Swiss bank deposits held by non-EU residents is used as a control group. The study finds that around the time of the entry into force of the Agreement the deposits of EU residents decreased by more than 40% and claims that the estimated treatment effect is large and very robust, with implied elasticity in the range 2.5-3. The entry into force of the Agreement is seen as a turning point in the evolution of deposits of EU residents and non-EU residents. The author finds that the average annual growth rates for the quarters after the entry into force of the Agreement (-9.1% for EU vs. 19.2% for non-EU) as proof of the impact on deposits of EU residents. Johannesen finds similar reactions, although not as strong and definite, with regard to Luxemburg and Jersey.

While acknowledging that the sectoral breakdown for the "non-bank" balances does not allow a separate data series for balances with individuals[45], the author argues that, at least for Switzerland as a reporting country, the "non-bank" group would consist predominantly of households, and even if there would be also companies in that group it would tend to bring down the estimated elasticity.

Previous Savings Directive review

The 2008 Report and the accompanying working document on economic evaluation used the BIS data to measure the trends in the international deposits across three groups of countries: (i) EU Member States that exchange information; (ii) EU Member States and third countries or jurisdictions applying a withholding tax; and (iii) other jurisdictions outside the network of Savings Agreements. The comparison of the quarterly growth rate for the three categories revealed that until 2004 growth rates varied much less in the countries in groups (i) and (ii) than in the jurisdictions outside the network of Savings Agreements (group (iii)). After that period the development for all groups appeared similar.

Secondly, the share of each of the groups in the total external non-bank deposits from the Member States and the third countries and territories in the network of Savings Agreements was observed for the period 2002-2007. It was found that the share of the Member States and third countries or jurisdictions applying a withholding tax (group (ii)) had decreased from 35% to 29.3% between mid-2003 and mid-2005, with a corresponding increase in the share of other jurisdictions outside the network of Savings Agreements (group (iii)). These shares have been stable since this period.

Thirdly, a comparison was made between the three groups with regard to the share of non-bank deposits[46] in the total of all deposits (i.e. from banks and non-banks). This share was found to be around 35% for groups (ii) and (iii) and around 20% for the Member States that exchange information (group (i)). This, coupled with the fact that the findings from the previous paragraph were not matched by similar findings with regard to deposits from banks, had suggested that non-bank depositors have a preference for countries maintaining some form of bank secrecy.

Limitations of the data

Several limitations exist which must be taken into consideration when analysing the results stemming from an analysis of BIS data. These are summarised below.

With regard to the sectoral breakdown, it is not possible to differentiate between deposits from individuals, companies or other structures within the total amount of the non-bank balances. Therefore, any changes to the deposits should be interpreted with caution. As mentioned above, Johannesen assumes in his paper that most deposits are held by individuals. While it is impossible to know the exact share of individuals in the depositor base, the country split could give an indication as to whether Johannesen's assumption is correct. Indeed, the top five non-EU vis-à-vis countries/territories are offshore centres with another offshore centre at ninth place. While many entities established in those countries/territories may be held directly or indirectly by individual beneficial owners, deposits may not necessarily be held directly by individuals but rather by intermediary structures. Therefore, it appears that Johannesen's assumption appears rather strong from that perspective. Some indication on the share of banks' business with private individuals may be derived from the publication "Banks in Switzerland 2010"[47] where the share of private customers varied between 30% and 50%. Another indication may be derived from comparing the BIS data (for all non-financial balances) with the ECB data (for households) where the share of private customers for UK and LU varies between 25% and 40%.

While many Member States report to the BIS, there are several which do not report. In addition, many third countries/territories, both in the network of Savings Agreements and some important financial centres in South-East Asia that report to the BIS, did not agree to the disclosure of their bilateral claims/liabilities. In fact, only Switzerland and Guernsey from the Savings Agreements network have agreed to disclosure through the BIS. This would enable only a partial analysis from the point of view of the jurisdictions within the scope of the Savings Agreements as locations of potential paying agents. Nevertheless, the vis-à-vis country data for the countries that agreed to the disclosure of their bilateral positions is a good basis for evaluating the deposit base attributable to depositors from most offshore centres. It can reasonably be assumed that the non-bank sector in those jurisdictions does not consist primarily of industrial companies or individuals, but of intermediary entities.

Despite the limitations highlighted above, the data could be used to give an approximation of global trends on the evolution of the residence of the holders of debt claim liabilities in key jurisdictions inside and outside the scope of the Directive. In addition, the data can be used to measure the interconnectedness of different groups of countries in financial terms. This is especially important with regard to intermediary entities from offshore centres.

Evolution of financial centres – aggregate BIS data

As mentioned above, the previous (2008) review of the Directive grouped (i) EU Member States that exchange information; (ii) EU Member States and third countries or jurisdictions applying a withholding tax; and (iii) other jurisdictions outside the network of Savings Agreements and performed comparisons of the evolution of international deposits between these categories. Unfortunately, from the second group, only the relevant Member States, Switzerland and Guernsey have agreed to disclose their bilateral data for the purpose of the review. From the third group some important offshore financial centres like Singapore, Hong Kong, Macao, Malaysia and Taiwan have not agreed to disclose their bilateral data for the purpose of the review. Therefore, the results reproduced for this review may not be comparable to those produced for the 2008 review.

Publicly available data[48] allows for a full comparison along the lines of the 2008 review, i.e. grouping counties into different groups and observing the evolution of their shares in non-bank positions. There is an additional limitation in that the amounts compared are for positions with all counterparties and not only the EU. As mentioned previously, Johannesen contrasted the evolution of deposits by EU non-bank sector against the non-EU non-bank sector for Switzerland and to a lesser extent for Jersey and Luxemburg. Such differing trends would not arise in this comparison, since it is based on the aggregated data for all vis-à-vis countries. For the purposes of the review, countries have been divided into the following categories:

Table (5): Categories used for the purposes of the review:

Category || Countries included

MS info exchange || EU Member States that exchange information under the Directive

MS WHT || EU Member States that apply a withholding tax under the Directive

Agr WHT/info exchange || Countries or jurisdictions with a Savings agreements

RoW onshore || Third countries considered to be onshore financial centres

RoW offshore || Third countries considered to be offshore financial centres

Figure (1): Share of BIS reporting countries in non-bank deposits, by category

Figure (1) demonstrates that the shares remain relatively stable at around 43% (2.8% average quarterly growth rate) for the Member States that exchange information, and 7% (2% average quarterly growth rate) for the Member States that levy a withholding tax[49]. The share of the offshore third countries group[50] also remained relatively stable at around 10% (1.95% average quarterly growth rate). However, the share of the onshore third countries group[51] increased from 8.85% in 2000 to almost 20% in 2010 (5.02% average quarterly growth rate) mostly at the expense of the third countries group that are part of the network of savings agreements whose share fell from 27.78% in 2000 to 20.69% in 2011.

The publicly available BIS data for those countries that did not disclose their bilateral data could in addition give an indication of their relevant importance in terms of international deposits[52] (figure (2)). Figure (2): Trends for the major offshore jurisdictions within the network of Savings Agreements, based on all foreign non-bank deposits

The balances for Cayman Islands start at values comparable to those for Switzerland, but with an average quarterly growth rate of 3.72% until the third quarter of 2007 exceed these values consistently after 2003 and, unlike Switzerland (average quarterly growth rate of 2,07%) and Jersey (average quarterly growth rate of 4,76%), do not seem to be affected during the last financial crisis. The balance for Cayman Islands is actually the second largest of all BIS reporting countries and comparable to that for the United States, as seen from the data for the first quarter of 2011 below in figure (3).

Figure (3): 5 Largest BIS reporting countries/jurisdictions based on foreign non-bank deposits

The share of EU positions in total worldwide positions with Switzerland and Guernsey, which ranges between 25% and 60%, may serve as a general point of departure is assessing the share of EU customer related business in addition to some of the above-mentioned centres.

Evolution of international deposits of EU residents

As mentioned above, an entire replication and an update of the 2008 review based on a split among different groups of Member States is not possible as some of the dependent territories no longer allow the disclosure of their bilateral data for the purpose of the review. Nevertheless, the split mentioned below in figure (4) yields comparable results.[53]

Figure (4): Share of investment location of deposits of EU non-bank depositors in BIS reporting countries.

The share of Member States that exchange information in the deposits by EU non-bank sector remains relatively stable at around 56% (reaching 60% at the end of 2010), while the share of third countries increases from 4% in 2000 to above 20% in the years 2006-2008, primarily at the expense of Member States that levy a withholding tax and jurisdictions within the network of Savings Agreements. However, it should be noted that the absence of data on Cayman Islands and Jersey from the group of jurisdictions within the network of Savings Agreements is a serious limitation to the comparison. As demonstrated in figure (3), based on publicly available BIS data, the non-bank deposit balances in the Cayman Islands is larger than that of Switzerland.

Evolution of international deposits by the non-bank sector from jurisdictions in Annex I and Annex II

The Proposal that resulted from the 2008 Report and is currently under discussion in the Council includes an "Indicative list of categories of entities and legal arrangements which are considered to be not subject to effective taxation, for the purposes of Article 2(3)". Annex I consists of a list of jurisdictions where the entities established would be subject to look-through provisions[54]. Annex II contains a list of "Entities and legal arrangements whose place of establishment or place of effective management is in a country or jurisdiction listed in Article 17(2), to which Article 2(3) applies pending the adoption by the country or jurisdiction concerned of provisions equivalent to those of Article 4(2)"[55].

In order to put the deposits from those jurisdictions into perspective, figure (5) compares the evolution of deposits in EU Member States and Savings Agreement countries ("EUSD->") by EU non-bank depositors ("->EU") with those BIS reporting countries/jurisdictions included in Annex I ("->Annex I") and Annex II ("->Annex II") of the Proposal.

Figure (5): Evolution of deposits of EU non-bank depositors vs. depositors from Annex I and Annex II.

The results show that the deposits of the non-bank sector entities from those jurisdictions is rather significant (an average of 34.44% for the two annexes combined) and the implementation of an approach for intermediary entities from those jurisdictions in the Directive would therefore appear justified and necessary.

It is also important to look further into the breakdown in figures (6) and (7) below, i.e. deposits of the non-bank sector from the jurisdictions in Annex I ("->Annex I") into the three different groups (i) EU Member States that exchange information ("info-EU->"); (ii) EU Member States levying a withholding tax ("WHT-EU->") and (iii) jurisdictions from the Savings Agreements network ("Agr->").

Figure (6) Share of non-bank deposits Figure (7) Amount (million USD) of non-bank

of BIS reporting countries category per deposits of BIS reporting countries category per

amending Proposal annex I amending Proposal annex I

The comparatively large share (44% on average) of the third group (iii) jurisdictions from the Savings Agreements network in the deposits of the non-bank sector from the jurisdictions in Annex I (figure 6) and the fact that the balances of the three groups with the jurisdictions in Annex I have also (figure 7) nearly doubled from 2002 until 2007[56] is an indication that the implementation of the look-through provisions for entities in Annex I is well justified and necessary not only in the context of the amendments to the Directive but also for updating the Savings Agreements.

A third approach which also focuses on the updating of the Savings Agreements is to look at the interconnectedness of each of the jurisdictions within the network of Savings Agreements with the other jurisdictions from the same group. Currently, there are 270 bilateral agreements between each of the 27 Member States and each of the 10 dependent and associated territories and 5 separate EU agreements with Andorra, Liechtenstein, Monaco, San Marino and Switzerland. The bilateral agreements feature provisions of paying agent upon receipt in the limited version of the current text of the Directive. Nevertheless, unlike the Directive, there are certain interpretational issues with regard to the application of the paying agent upon receipt in triangular situations involving an upstream economic operator from one Member State/territory, a paying agent upon receipt from another Member State/territory and a beneficial owner from a third Member State/territory. These are primarily due to the bilateral nature of the agreements with the dependent and associated territories. The 5 EU agreements do not currently include paying agent upon receipt provisions at all.

Figure (8) below shows the shares of non-bank deposits from the three groups of countries: (i) EU Member States ("->EU"), (ii) Annex I countries ("->Annex I") and (iii) Annex II countries ("->Annex II"), in the jurisdictions within the network of Savings Agreements ("Agr->") which is a means to measure the latter's interconnectedness with the three groups.

Figure (8): Deposits by EU, Annex I and Annex II countries in Savings Agreements countries

The share of deposits from the EU Member States shows a steady decrease from 50% in 2004 to 35% in 2007, mainly to the advantage of the share of deposits from Annex I jurisdictions, which increased from 24% in 2004 to 34% in 2007, but also to the share of deposits from other Annex II jurisdictions, which increased from 26% in 2004 to 31% in 2007. These results, in addition to the aforementioned necessity to include look-through provisions for Annex I entities in the agreements, also supports the need for a solution to triangular situations for Annex II jurisdictions involving upstream economic operators, paying agents upon receipt and beneficial owners from three different Member States, third countries or territories.

In order to identify individual jurisdictions from Annex II as the jurisdiction of the non-bank depositor, the analysis must rely solely on publicly available BIS data[57] even though the information is aggregate. To put their vis-à-vis balances in perspective, it is useful to have a look at the first 10 countries ranked by the amount of non-bank deposits by investors from those countries.

Figure (9): Share of top ten vis-à-vis countries of non-bank depositors in all BIS reporting countries

As seen from figure 9, the shares of Cayman Islands and West Indies (collectively)[58] average 12% and 4% respectively of all non-bank deposits in all BIS reporting countries.

Evolution of international EU deposits vs non-EU deposits

For this part, the vis-à-vis countries are divided into two groups (figure 10): (i) EU and (ii) non-EU. The evolution of deposits from the non-bank sector for both groups is provided for the United Kingdom, Switzerland, Germany, Ireland, Netherlands, Belgium, Luxemburg and France, being the eight largest BIS reporting counties that have agreed to the disclosure of their bilateral data. This approach is used by Johannesen and the underlying assumption is that EU and non-EU depositors differ in that the Directive applies only to EU depositors. Johannesen claims that the growth of EU deposits following the entry into force of the Directive slowed down in comparison to the control group of non-EU depositors. The deficiencies of relying on data that aggregate all types of non-bank depositors have already been outlined above. The result for each country is listed below. The countries are divided into three groups: (i) countries that reflect the trend described by Johannesen (the United Kingdom, France and Switzerland); (ii) counties that do not reflect the trend described by Johannesen (Germany, the Netherlands and Luxemburg); (iii) counties that reflect a trend opposite to the one described by Johannesen (Austria, Ireland and Belgium). However, if the data series are aggregated, the overall trend reflects the trend described by Johannesen.

Figure (10) Aggregated time series for foreign EU vs. non-EU deposits for the 8 Member States and Switzerland

Group (i) countries that reflect the trend described by Johannesen (UK, FR and CH) (figures 11-13)

Figure (11)………………………………………………… Figure (12)

The United Kingdom || France

Figure (13)

Switzerland[59] ||

Group (ii) counties that do not reflect the trend described by Johannesen (figures 14-16)

Figure (14)………………………………………………………………Figure (15)

Germany || Netherlands

Figure (16)

Luxemburg

Group (iii) counties that reflect a trend opposite to the one described by Johannesen (figures 17-19)

Figure (17)………………………………………......................Figure (18)

Austria[60] || Ireland

Figure (19)

Belgium

For details on break-in-series please refer to the document at:

http://www.bis.org/statistics/breakstables17.pdf

Conclusion

As demonstrated, 3 out of the 9 countries show (to a varying degree) a decreased growth of EU deposits at the time of the entry into force of the Directive compared to the control group of non-EU depositors. For three others the comparison is inconclusive. For three Member States the opposite effect is observed, although the growth rate difference is not so pronounced after the end of 2005. The per-country analyses show that the effect described by Johannesen can indeed be observed in at least three of the 9 countries with significant deposits from the foreign non-bank sector, while the analysis shows that the effect described by Johannesen can also be observed if all the 9 data series for the countries are aggregated.

The vis-à-vis results indicated that the amount of foreign non-bank deposits for many offshore centres is quite significant on a worldwide basis, especially for the Cayman Islands, Switzerland and Jersey. The vis-à-vis results revealed that a significant share of the non-bank deposits in Member States, and in within the network of the Savings agreements, are held by customers located in offshore jurisdictions. These results indicate that the implementation of look-through and paying agent upon receipt provisions for some relevant legal structures located in offshore jurisdictions is justified and necessary for both the Directive and the Savings agreements.

3.2. Euro-area deposits – ECB MFI[61] statistics

Description

The data provided by the ECB is based on MFI balance sheet statistics. It comprises monthly balances of deposits into monetary financial institutions in each of the Member States placed by non-residents from the euro-area, i.e. the balances are aggregated at euro-area depositor level without a detailed split among individual euro-area Member States. The data are split by the sector of the depositor, including a detailed split for households. The data are also split into seven different maturities, i.e. (1) Overnight deposits24, (2) Deposits with an agreed maturity up to 1 year, (3) Deposits with an agreed maturity over 1 and up to 2 years, (4) Deposits with an agreed maturity over 2 years, (5) Deposits redeemable at notice up to 3 months, (6) Deposits redeemable at notice over 3 months, (7) Repurchase agreements.

The major advantage of the data is that it is very similar to the Directive's product scope, personal scope (individuals), cross-border scope and the level of reporting:

(i) Product scope: According to Annex I, Part I, Subpart I, point 7 of Regulation ECB/2001/13:

bank deposits shall mean cash deposits made with credit institutions, repayable on demand or upon prior notice of up to three months, or at agreed maturities of up to two years, inclusive of sums paid to credit institutions in respect of a transfer of securities under repurchase operations or securities loans

From the definition of bank deposits it transpires that those would normally be classified as debt claims[62] and the income thereof would fall within the scope of Art. 6(1) (a) together with income from other debt claims from debt securities.

(ii) Personal scope: According to Annex I, Part I, Subpart III, point 9 of Regulation ECB/2001/13

In order to calculate a monthly sector disaggregation of the monetary aggregates and credit counterparty, other resident sectors are further broken down by the following subsectors: other financial intermediaries + financial auxiliaries (S.123 + S.124), insurance corporations and pension funds (S.125), non-financial corporations (S.11) and households + non-profit institutions serving households (S.14 + S.15).

The sectoral split provides a separate time series for households and non-profit institutions serving households. This is a sufficiently detailed split that allows the approximation of deposits held by individual beneficial owners as defined in the Directive.

(iii) Cross-border scope: According to Annex I, Part I, Subpart III, point 8 of Regulation ECB/2001/13:

Counterparties located in the domestic territory and in the other participating Member States are identified separately and treated in exactly the same way in all statistical breakdowns.

The split between resident and non-resident depositors from other euro-area Member States allows the filtering of only those deposits held by non-resident beneficial owners, which is another element that very closely matches the Directive.

(iv) Level of reporting: Since the product covered is bank deposits, it is reasonable to expect that the bank/debtor is the paying agent and the household depositor/creditor is the beneficial owner under the Directive, i.e. an intermediary would normally not be involved in that setup unlike other products under the Directive (e.g. securities). In addition, the paying agent reporting level (i.e. paying agents report in their Member State of establishment and not that of their head office) is also matched by the MFI data since there is an explicit prohibition of cross-border consolidation in Annex I, Part III, and p.8 of Regulation ECB/2001/13:

No consolidation for statistical purposes is permitted across national boundaries.

Therefore no deposits in foreign branches/subsidiaries are included in the reported data.

Limitations of the data

There are very few limitations inherent to the data. The data covers only Member States at the level of the MFI/debtor/paying agent and only aggregated euro-area at the level of the households/creditor/beneficial owner. Therefore, any comparison with non-EU MFIs or analysis of non euro-area households is not possible. Secondly, the data refers only to MFI deposits and not to the other types of savings products which come within the scope of the Directive, e.g. debt securities and units/shares in UCITS and other collective investment undertakings. Nevertheless, as long as the data are considered as the minimum amount of savings income to be explored, that last limitation would be mitigated. Thirdly, the sectoral breakdown aggregates households with non-profit institutions serving households. However, it is assumed that this allows for a sufficient approximation of deposits held by individual beneficial owners. Finally, there have been indications from individual central banks that the sectoral split is based on an estimation made by the statistical bureau of the relevant central bank. It is expected that the lowered expectations for the coverage would accommodate any possible variations within the confidence interval for those estimations.

Estimation of the coverage of derived interest income from the tax base

The Commission obtained ECB data on cross-border bank deposits of households in the euro-area. The data includes each Member State as the country of the deposit and the euro-area (as one group) as the place of the household depositor. This data was selected as the best possible of all available alternatives in order to provide a limited evaluation of whether the data exchanged (or tax withheld) under the Directive reflect a satisfactory coverage of the potential tax base involved.

While not covering all types of interest income under the Directive, all the balances for deposits should normally be within the scope of art. 6(1) (a) thereof, which would mean that the comparison would give the absolute minimum of the underlying tax base.

As a second step, the monthly data on the deposits were matched with the corresponding interest rates, also available on a monthly basis from the ECB[63] and broken down according to the aforementioned maturities. Where those were not available, reasonable estimations were made, with the preference for an underestimation of the particular interest rate where necessary in order to provide the best-case scenario in terms of the reflection of the underlying tax base. Since the MFI data reflects stocks and not flows, the interest rates on the outstanding amounts are preferred and sometimes substituted for similar maturities[64]. In some cases a sensitivity analysis was performed with the most favourable reference rates (even 0%). It must be noted that the rates used are those that apply to both residents and non-residents in the euro-area Member States, but it is reasonable to assume the same level of deposit interest rates apply to both residents and non-residents in the euro-area Member States. From the matching of the monthly balances per maturity with the relevant interest rates an annual average of the underlying tax base was derived.

As a third step, the estimated annual average of the underlying tax base was compared to the information exchanged with euro-area Member States for interest income under Art. 8(2) (a)[65], or when the Member State has opted for the last sub-paragraph of Art. 8(2)[66] the underlying tax base was compared to the part on "total amount of interest or income" for each of the fiscal years 2006-2009. From the comparison a % of coverage of the potential tax base by the exchanged data (or tax withheld) under the Directive is derived.

Simplified illustrative example:

Member State X has a MFI deposit amount of 100 EUR for each of the 7 maturity breakdowns for each month in the year 2009 (therefore total deposits for all maturities are 700). The interest rates for all of the maturities and months in 2009 equals 2%. For each of the months in 2009 the derived interest rate received/credited would be 700*2%=14 EUR. This result is then compared to the actual information exchanged on interest payments by Member State X for that year to euro-area Member States which in this example is 16. The resulting coverage is then (16/14) 114,3%. As previously outlined, it is expected that coverage results above 100% would be common.

This method gives only the absolute minimum of coverage of the underlying tax base, since the scope of the ECB data would always be smaller than the scope of classical interest income under Art.8(2)(a), the latter also including income from other types of debt claims than bank deposits. This effect would be even stronger for Member States that report only the "total amount of interest or income" under the last sub-paragraph of Art. 8(2), giving a certain bias for a higher estimated coverage for those Member States due to the fact that "total amount of interest or income" would also include distributions from UCITS under Art. 6(1)(c) and also potentially the income under Art. 6(1)(b) and Art. 6(1)(d) which is reported on a net basis (and not gross proceeds). Therefore, any coverage above 100%, even substantially higher, should be common. On the contrary, actual coverage, which is substantially lower than 70%[67] consistently across all of the four years surveyed would merit further investigation and follow-up with the relevant Member States.

In addition, it must be noted that this method gives some bias towards better % coverage for the withholding Member States, because the withholding tax figures reflect not only the classical interest income under Art. 8(2)(a) or "total amount of interest or income“ under the last sub-paragraph of Art. 8(2), but also sales proceeds from both debt instruments and units/shares in UCITS. The bias would be strongest for those Member States whose paying agents deal extensively with cross-border UCITS[68].

The results of the simulations are summarised in the tables (6) to (8) below:

Table (6) Coverage of interest income reported under Art.8(2)(a) as a % of notional income per ECB cross-border deposit:

|| BG || CY || DK || ES || HU || LT || LV

2006 || 0,00% || 26,04% || 129,06% || 108,21% || 99,73% || 42,83% || 110,75%

2007 || 85,96% || 68,51% || 200,87% || 72,51% || 68,56% || 72,78% || 75,45%

2008 || 58,08% || 44,47% || 40,31% || 82,00% || 143,08% || 49,92% || 93,57%

2009 || 50,69% || 49,72% || 137,37% || 103,68% || 309,14% || 58,14% || 60,57%

Average || 64,91% || 47,18% || 126,90% || 91,60% || 155,13% || 55,92% || 85,08%

|| MT || NL || PL || SI || UK[69]

2006 || 59,13% || 580,43% || 148,23% || 116,79% || 7,82%

2007 || 56,47% || 143,08% || 165,91% || 69,90% || 25,21%

2008 || 56,21% || 134,45% || 67,68% || 90,65% || 9,23%

2009 || 120,66% || 124,44% || 72,89% || 1478,97% || 9,07%

Average || 73,12% || 245,60% || 113,68% || 439,07% || 12,83%

Table (7) Coverage of interest income reported under the last sub-paragraph of Art.8(2) as a % of notional income per ECB cross-border deposit:

|| CZ || DE || EE[70] || EL || FI[71] || FR || IE

2006 || 1133,01% || 112,82% || 0,00% || 285,68% || 9624,82% || 61,70% || 266,64%

2007 || 825,46% || 72,19% || 0,00% || 166,63% || 167,10% || 58,39% || 358,28%

2008 || 578,29% || 73,19% || 62,35% || 129,48% || 56,54% || 53,90% || 574,72%

2009 || 489,47% || 154,90% || 103,01% || 100,39% || 88,02% || 64,28% || 71,68%

Average || 756,56% || 103,27% || 82,68% || 170,55% || 2484,12% || 59,57% || 317,83%

|| IT || LU[72] || PT || RO || SE[73] || SK

2006 || 1515,05% || 49,58% || 1,59% || 0,00% || 713,80% || 472,95%

2007 || 1083,70% || 44,56% || 6,74% || 37,21% || 711,71% || 72,81%

2008 || 381,13% || 36,66% || 26,51% || 30,48% || 1933,60% || 241,97%

2009 || 856,51% || 25,51% || 74,56% || 40,83% || 15573,38% || 139,51%

Average || 959,10%