EN    EN EN 
 
EN    EN  COMMISSION OF THE E UROPEAN COMMUNITIES 
Brussels, 13.11.2008 
SEC(2008) 2767 
  
COMMISSION STAFF WORKING DOCUMENT 
 
Accompanying the 
 
Proposal for a  
 
COUNCIL DIRECTIVE  
 
amending Council Directive 2003/48/EC on taxatio n of savings income in the form of 
interest payments  
IMPACT ASSESSMENT  
{COM(2008) 727 final} 
{SEC(2008) 2768}  
 
EN 2   EN 1. SECTION 1: PROCEDURAL ISSUES AND CONSULTATIONS OF INTERESTED PARTIES  
1.1. Organisation and timing 
Council Directive 2003/48/EC on the taxation of sa vings income in the form of interest 
payments  (the '2003 Directive') was adopted on 3 June 2003. Its ultimate aim is to enable 
savings income in the form of interest paymen ts made in one Member State to beneficial 
owners who are individuals resi dent for tax purposes in anot her Member State to be made 
subject to effective taxation in  their State of residence. Th e initially foreseen date of 
application (1 January 2005) was postponed until 1 July 2005. At that date Andorra, 
Liechtenstein, Monaco, San Marino and Switzerland started to apply equivalent measures to 
those of the 2003 Directive under Agreements  signed between each one of these jurisdictions 
and the Community; at the same time all the releva nt dependent or associated territories of the 
Netherlands and the UK (ten in all) started to apply the same measures as those of the 2003 
Directive, under agreements signed by each of them with each of the Member States at the 
time.  
Under Article 18 of the 2003 Directive 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 effect ive taxation of savings income and to remove 
undesirable distortions of competition ". 
Following the first revelations, in February  this year, about fraud cases involving 
Liechtenstein, there was a debate at the Ecofin Council on 4 March 2008 , and the Council 
"…called on the Commission to accelerate prep aration of a report on the implementation of 
the Directive 2003/48/EC since its en try into force on 1 July 2005… " . It appears, some 
wealthy European individuals (over 1,000 in Germany alone), with the support of certain 
financial institutions, evaded taxes by investing in foundations in Liechtenstein since the early 
2000s. The tax probe in Germany unveiled at l east 50 foundations of Ge rman residents in 
Liechtenstein with millions of Euros in their accounts. Neither the current provisions of the 
2003 Directive nor the equivalent measures included in the savings taxation agreement 
between the EC and Liechtenstein covered these cases. 
On 29 April 2008 a Commission Sta ff Working Document [SEC(2008)559]  entitled 
"Refining the present coverage  of Council Directive 2003/48/EC on taxation of income from 
savings" was presented. This work ing document highlighted the main problems identified and 
possible solutions for refining the scope of the 2003 Directive. At the end of the document, a 
number of key issues needing cl arification were listed. It served  as basis for an oral report by 
the Commission to the Ec ofin Council of 14 May 2008 . It was further subj ect to discussions 
with a group of external experts (see 1.2 below) , as well as with repr esentatives of Member 
States at a more technical level, and was al so put on the Commission website to enable 
comments from other stakeholde rs and interested parties. 
The first formal report under Article 18 of the 2003 Directive was adopted by the 
Commission on 15 September 2008 [COM(2008)552] , following a request included in the 
Council conclusions of 14 May 2008 to submit it to Council at the latest by 30 September. 
The report is accompanied by a Commission St aff Working Document "presenting an 
economic evaluation of the effects of Counc il Directive 2003/48/EC on the basis of the 
available data" [SEC (2008)2420].  This working document provide s quantitative approaches 
 
EN 3   EN to evaluate the functioning of the 2003 Directive.  It analyses the evolution of certain proceeds 
from investments that are covered by the 2003 Directive or that contain elements falling within its scope. In addition, th e analysis looks at the effect s of the implementation of the 
2003 Directive on some investment patterns. Th e last section of the document offers a 
statistical analysis of the im pact of the introduction of the 2003 Directive on savings and on 
bank deposits. 
There has not been an inter service steering gr oup, but the inter service consultations on the 
above three documents have involved five Di rectorates-General (Internal Market, Legal 
Service, Economic and Financial affairs, Secretariat General and External Relations). And several Directorates-General have also been  actively following the work of the group of 
external experts as well as the discussions with Member States in  Commission technical 
working groups (see 1.2). 
It should also be noted that the European Parliament resolution of 2 September 2008 on a 
coordinated strategy to improve the fi ght against fiscal fraud (2008/2033(INI))  
"34. Points out that reform of Directive 2003/ 48/EC must tackle its  various loopholes and 
deficiencies, as they prevent discovery of  tax evasion and fiscal fraud operations; 
35. Calls on the Commission, in the context of  reform of Directive 2003/48/EC, to 
examine options for reform, including investig ating some widening of the scope of the 
Directive with regard to t ypes of legal entity and sour ces of financial revenue;"  
1.2. Consultation and expertise 
Early in 2007 a special Expert Group on Taxation of Savings , with tax experts from banking, 
insurance, investments funds, asset management  and related sectors of the European Union, 
was set up to assist the Commission Services in their review of the functioning of the 2003 
Directive. The Expert Group thus consisted of representatives not only from sectors which are 
directly concerned by th e 2003 Directive, but also from s ectors which provide other savings 
products or investment struct ures and which could conceiva bly become concerned, if the 
scope of the 2003 Directive were to be extended. 
The Expert Group has met in Brussels four times between March 2007 and May 2008 and its 
mandate expires at the end of 2008. The objectiv e of the group is to provide the Commission 
with the viewpoint of the European Union ma rket operators on the ap plication of the 2003 
Directive in Member States and, at the same time, facilitate a first scrutiny of the possible 
impact on markets of any amendments to the Directive which could come up for consideration as a result of th e review process. Al so representatives of  other Directorate 
Generals attended the meetings of the Expert  Group and were informally consulted in the 
preparation of working documents submitted to the group. 
In particular, the experts were  asked to examine and comment on the main legal and practical 
issues of application of the Directive identified  in the discussions with Member States as well 
as on other issues which were brought to the attention of th e Commission services (through 
market operators, EC agreements  partners, complaints etc.)  
The various trade associations of European market operators were also asked to answer a 
quantitative questionnaire that was prepared with the cooperation of the European Banking 
Federation. More detailed information about the work of this Expert Group can be found on 
 
EN 4   EN the following webpage, where there is a specia l section devoted to the "Savings Directive 
Review", created in the first semester of 2007: 
http://ec.europa.eu/taxation_customs/taxation/personal_tax/savings_tax/savings_directive_review/index_en.htm   
On that webpage i.a. the following docume nts can be found: a document prepared by 
the Commission Services (early 2007) with  26 questions on policy issues to the 
experts; the written contributions from the experts and from their trade associations 
in response to those ques tions; a summary made by the Commission services of the 
contributions thus made from the trade associations; summary meeting records; a quantitative questionnaire and a revised version of this questionnaire prepared with 
the cooperation of the European Banki ng Federation and taking into account the 
suggestions of this and other associations ; the responses received, from eight trade 
associations, to this revised questionnaire (see tables  2.31 and 2.3.2 ); a working 
document by the Commission services of 27 March 2008 for a meeting with experts 
from Member States (and also discussed in  the Expert Group); contributions from a 
number of the experts in response to that  document; and contributions notably from 
the European Banking Federation (of 3 July 2008)
, Comité Européen des Assurances  
(of 28 May 2008 and 3 October 2008) and the European Fund and Asset 
Management Association  (10 September 2008) on additional issues which they 
consider relevant for the Commission's assessment of the operation of the 2003 
Directive and its futu re possible developments, taking into account the discussions 
during spring/early summer this year. On the webpage all interested parties have 
been invited to make contributions to the review process and a special e-mail address 
has been provided for that purpose. – Howeve r, very few contribu tions or questions 
were received in that way. 
Informal meetings have also been held with in terested parties to captu re their views and sound 
out any problems they have encountered. Furthe rmore, the 2003 Directive has been discussed 
at a number of seminars and conferences (m ost recently at the A nnual Congress of the 
International Fiscal Association in  Brussels in early September 2008). 
Starting already in 2005, Commissi on staff have also been examining the operation of the 
2003 Directive and its interpretation with expert s from the tax administrations of Member 
States in two Commission working groups, Working Party IV on Direct Taxation , and the 
Working Group "Administrative Cooperati on in the field of Direct Taxation" . The first group 
has concentrated on the legal and practical issues  related to the substa ntial content of the 2003 
Directive. The latter group has helped ensure  a monitoring of the co rrect implementation of 
the Directive concerning exchange  of information and transfer of  funds relating to the revenue 
sharing arrangements between Member States.  It has also helped develop the format for 
information exchange. 
The Commission's standards on consu ltations have thus been met. 
1.3. Data availability 
In order to properly assess the functioning of th e 2003 Directive and to be able to prepare the 
reports that the Commission has to present to  the Council every 3 years pursuant to Article 
18, the Commission needs to receive relevant st atistics from Member States and market 
operators. However, the 2003 Direc tive currently does not contain provisions requiring either 
the Member States or market operato rs to provide any statistical data. 
 
EN 5   EN Against this background, the Council, on 26 Ma y 2008, adopted conclusions  with respect to 
the list of Statistics that  Member States should send to the Co mmission every year to facilitate 
its analysis. These conclusions also committed Member States to complete, before 31 May 2008, the tables based on that list for the fisc al years of 2005 and 2006, in view of the first 
report that the Commission was asked to send to the Council in September 2008. The 
conclusions of the Council built on a staff wo rking document of the Commission that defines 
the statistics to be provided on a voluntary basi s by Member States and the other jurisdictions 
participating to the savings taxation measures. These include:  
• For countries levying a withholding tax: the tax revenue shared; 
• For countries exchanging information: the in terest payments and sales proceeds reported ; 
• The number of beneficial owners; 
• The number of paying agents; 
• The part of the total annual tax collected from  resident taxpayers on interest payments 
made by domestic paying agents (optional) and 
• The part of the total annual tax collected from  resident taxpayers on interest payments 
made by foreign paying agents (optional). 
Despite the efforts made by Member States a nd market operators to provide the Commission 
with statistics, the quality a nd quantity of the statistics r eceived are not sufficient (and 
sometimes even inconsistent) to make a detailed  quantitative analysis of the Directive during 
its first years of application.  
In parallel, in the framework of the Expert Gr oup on Savings, some of the market operators' 
associations provided the Commission with some  start-up costs and recurrent costs for the 
application of the provisions of  the 2003 Directive (See tables 2 and 3 below). However, the 
information provided does not cover the whol e sector, is partial and is not really 
representative. 
Finally, alternative data have b een collected from Eurostat on the interest payments received 
by individuals as well as from the Bank for Inte rnational Settlements on bilateral cross-border 
deposits in banks, but both categories include a mix of products or beneficial owners that are 
not covered by the Directive. Table 8 in the annex summarises the availability and shortcomings of those data. 
The examination of the available data in  the Commission Sta ff Working Document 
(SEC(2008)2420) presenting an ec onomic evaluation of the e ffects of Council Directive 
2003/48/EC does not establis h that the application of the Dir ective led to any change in the 
geographical composition of interest-bearing savings. 
The lack of quantitative data is not "per se" an obstacle to make a proper analysis of the 
problems identified during the consultation pro cess held with Member States and market 
operators or to propose adequate solutions. Fu rthermore, there is a need to anticipate 
developments based on the input of the stakeh olders, which clearly recognise the need for 
improvements in the system.  
 
EN 6   EN 2. SECTION 2: PROBLEM DEFINITION  
2.1. What is the issue or proble m that may require action? 
The ultimate aim of the 2003 Dir ective is to allow each Member State to apply its domestic 
tax provisions to its resident i ndividuals on interest payments that these individuals receive 
from paying agents established in other Memb er States. To achieve this, the 2003 Directive 
builds on an automatic exchange of informati on between Member States on such payments. 
However, during a transitiona l period, three Member States (Austria, Belgium and 
Luxembourg) are allowed to apply a withholding tax and share the revenue with the Member State of residence of the individual conc erned instead of providing information. The 
transitional period does not expire at a specific  date but is linked to further conditions being 
fulfilled in relation to certain other jurisdicti ons. Under the Agreements for the same or 
equivalent measures to those of the 2003 Di rective, mentioned above, the non-EU parties 
either provide information to the EU Member States or levy a withholding tax with revenue 
sharing. 
Pursuing the aim of the 2003 Directive would requi re that interest pa yments obtained by an 
individual through an intermediate  vehicle are given the same tr eatment as interest payments 
received directly by the indivi dual. The same applies to those income payments that can be 
considered equivalent to interest payments be cause they arise from savings products with 
similar levels of risk and liquidity as debt claims. If consistent treatment of other 
comparable situations  is not achieved , not only is the effectiveness of the Directive 
endangered, but there can be di stortions in competition between  comparable savings products 
and structures.  
The 2003 Directive has only been in application for three years. The Council, when adopting 
the unanimous conclusions on 27 November 2000
 (see description of option 2 in section 4.1 
below), on what should be the coverage of the future Directive, made  a deliberate choice of 
principle to limit the scope to interest payments  (or payments of interest originating income 
from investment funds) made to individuals , and to rely on the cooperation of  market 
operators acting as paying agents  either at the moment when the interest is paid out to the 
beneficial owner or, under spec ific conditions, when the interest is received by the entity 
concerned ("paying agent on receipt"). But the wish  to provide, as far as possible, simple and 
clear rules for these market operators led to the measures being drafted in a way which, 
unintentionally, further limited th eir actual coverage. In some cases, more attention seems to 
have been devoted to the formal aspects of transactions than to their economic substance and to the actual way in which the market operates.  Conversely, provisions such as the so-called 
“paying agent on receipt” mechanism [Article 4(2) ] seem not to have been fine-tuned so as to 
provide market operators with the degree of le gal clarity needed to achieve the expected 
results. Article 4(2) currently defines this "p aying agent on receipt" onl y in a residual way, by 
using a reference to conditions (lack of lega l personality and benef its not taxed under the 
general rules for business taxation) which can be very difficult to assess, notably by the upstream economic operators which are given some  obligations on the payments made to the 
entities concerned in cr oss-border situations.  
The review process has shown that the coverage  of the 2003 Directive is not as wide as was 
intended according to the unanimous Council c onclusions of 27 November 2000, and that 
there are loopholes in the provisi ons of the Directive. Such l oopholes are detrimental to the 
effectiveness of the 2003 Directive,  whether it is applied in the form of automatic information 
exchange or, transitionally, th rough the levying of a withholding tax. Furthermore, experience 
 
EN 7   EN shows that some aspects of the 2003 Directive s hould be clarified to f acilitate the application 
of its provisions by paying agents, thus reducing their administrative bu rden. This is notably 
the case, as indicated previously, for the special  rule of paying agent on receipt in Article 4.2 
of the Directive.  
There is evidence that, for payments made w ithin the European Union, the 2003 Directive can 
be circumvented by EU reside nt individual investors by: 
1. making use of intermediate investment vehi cles (legal persons or arrangements) which 
are not covered by the current formal definiti on of beneficial owner (that refers only to 
individuals) or which are not  currently compelled to act as paying agents, and/or 
2. rearranging their portfolio fi nancial/investment in such a way that income remains 
outside the definition of interest payments under the Directive, whilst benefiting from 
limitations of risk, flexibility and agreed return  on investment that are equivalent to debt 
claims. 
In relation to the second issue,  it should be recalled that the original choice to exclude all 
innovative financial products from the scope of the Directive (ECO FIN Council conclusions 
of May 1999 and November 2000) was accompanied by an express statement that this choice 
should be re-examined on the occasion of the firs t review of the Directive, the aim being to 
find a definition covering all securi ties that are equivalent to debt  claims so as to ensure the 
effectiveness of the Directive in a changing envi ronment and to prevent market distortions. It 
is also worth mentioning that domestic tax syst ems have evolved over th e last few years to 
assimilate the treatment of income from so me types of innovative fi nancial products to 
interest from debt claims. 
Besides the loopholes mentioned above, the consultation with market operators has also 
revealed that the application of the provisions of the Directive by paying agents may in certain 
cases be burdensome because of lack of clar ity. "This is the case of (i) the definition of 
'interest payment' and 'paying agent', (ii) the definition of 'residual entities' (i.e.: the entities to 
be considered as paying agents upon receipt of an interest payment ) and (iii) the formulae 
that may be used in different Member States to determine whether a fund or a particular fund 
event falls under the Directive", as has been pointed out by the Europ ean Banking Federation 
(EBF), which represents most of the paying agen ts already involved in the application of the 
Directive across the EU. 
Finally, it has to be mentioned that the Directive at present does not require Member States to 
provide the Commission with relevant statistic s respectively on the information exchange or 
on the withholding tax aspects of the Directive. This lack of information makes it difficult to 
properly assess the effectiveness of the Directive. 
The following table provides a list of the identi fied problems and/or l oopholes in the current 
Directive according to their rele vance and the need for action: 
 
EN 8   EN  
Table 1: Hierarchy of identified problems 
1. Use of intermediary structures not cove red by the present scope, notably some legal 
arrangements (which can't legally speaking be defi ned as "entities"), and lack of clarity on the 
paying agent upon receipt rule for the economic ope rators which are dire ctly or indirectly 
involved (see option 3 in section 4)  
2. Different treatment of investment funds wh ich are not authorised UCITS in accordance 
with Directive 85/611/EEC ("non-UCITS"), depe nding simply on the legal form of these non-
UCITS (incorporated always excluded from the scope of the 2003 Directive whilst non-
incorporated are always included) (s ee options 2 and 3 in section 4) 
3. Use of comparable products to debt claims (certain structur ed products and certain life 
insurance contracts) (see option 3 in section 4) 
4. Deficiencies in the rules for identification of beneficial owners, notably concerning the 
determination of their residence for the purpos e of the 2003 Directive (see option 3 in section 
4) 
5. Coping with the use of conduit vehicles established in third countries in a way which is 
coherent with freedom of capital movements (parallel need of replacing the certificate 
procedure to avoid the withholding tax with the simplest procedure of voluntary disclosure of 
information to the tax authoritie s) (see option 3 in section 4) 
6. Lack of statistics from Member States. Too li mited use of the Tax Identification Number of 
beneficial owners which makes the informati on more difficult to use by the Member State 
where they are resident (see option 3 in section 4) 
 
2.2. What are the underlying drivers of the problem? 
Recent events, such as the ta x fraud cases in relation to Liechtenstein foundations, have 
demonstrated clearly how important it is to esta blish international coope ration with a view to 
preventing, in the direct taxation area, fraud and evasion linked to cross-border financial 
investments. The 2003 Directive, together with the related Ag reements, should certainly be 
considered as an important step in this proc ess, developing further the principles already 
provided for by Directive 77/799/EEC on mutual assistance between tax authorities in the 
field of direct taxation . This Directive is designed to allow the flow of information in relation 
to direct taxation (income tax, company tax and capital gains ta x), together with Insurance 
Premium Tax, between the tax authorities of Me mber States. The Directive enables Member 
States to co-ordinate their investigative acti on against cross-border ta x fraud and carry out 
more procedures on behalf of each other, but at  present Member States are allowed to make 
the exchange of information conditional on some aspects of their internal law (e.g. confidentiality of bank information). 
The 2003 Directive builds on th e Mutual Assistance Direct ive but ensures cooperation 
independently of the existence of specific nation al conditions. It signif ies an important step 
 
EN 9   EN forward in that, for the first time, a coordinated effort in the direct tax area has been agreed 
and simultaneously applied by a wide number of  jurisdictions with different interests and 
traditions. However, it is clear that a further strengthening of the mutual assistance rules is 
needed to combat tax fraud and evasion. 
In the era of globalisa tion, the relative ease with whic h customer relationships can be 
established and maintained via the internet a nd the advantage of open markets make Member 
States’ tax systems more vulnerable to tax ev asion. Even if it is difficult to make an 
estimation of the bulk of tax evasion involving territories not covered by the 2003 Directive 
or bilateral agreements on saving s taxation, it was very apparent  from the beginning that the 
savings taxation mechanism should be coupled with  an extension of the same or equivalent 
measures to as many important financial centres  as possible. This in ternational aspect has 
been underlined by the Council's conclusions of 14 May 2008 on good governance in the tax area whereby the Commission has been mandated to ensure that relevant agreements with 
third countries contain clauses committing those countries to the principle of exchange of 
information. 
It is difficult to make a proper assessment of th e effects that any extens ion of the scope of the 
2003 Directive could have on capital flight to third coun tries. As explained before in section 
1.3, the examination of the availa ble data does not establish that the application of the 
Directive led to any change in the geographi cal composition of interest-bearing savings. 
Although there appears to have been no major shifts in the composition of savings when 
viewed at macroeconomic level, both national ad ministrations and operato rs have argued that 
improvements are needed either to deal w ith loopholes or to clarify procedures.  
A recent study carried out in 2004 on elasticity of savings in th e form of cross-border deposits 
in banks 
1 concludes that: 
(1) A 1% increase in the interest tax burden (defined as the interest rate time the tax rate) 
increases external deposits by about 2.4% (i.e. the capital flight is  an additional 2.4%). 
(2) The sensitivity of external depositing to the tax seems to be dependent on the level of 
interest rates. With low interest rates, the tax burden becomes small in percentage of the asset up to a point where depositors may become insensitive. 
(3) There is little evidence that  international information ex change has a strong impact on 
bilateral depositing. 
It should however be noted th at the study applies to intern ational deposits that probably 
represent a small share of total savings in interest-bearing instruments and which may also be amongst the most mobile instruments. The study  also refers to data for 1983-1999, a period 
prior to the implementation of the Savings Direct ive. Hence, the relevance of the study for the 
present context is subject to the Lucas Critique that the sensitivity may have decreased because of the existence of a new regulatory en vironment created by the adoption of the 2003 
Savings Directive. 
                                                
 
1 Huizinga, H. and Nicodème, G. (2004). Are Intern ational Deposits Tax-Driven, Journal of Public 
Economics. 88(6): 1093-1118.  
 
EN 10   EN As explained in section 4, the different optio ns have taken into account the international 
dimension of the 2003 Directive and in particular  the need to prevent a possible relocation of 
savings to non-EU countries as a consequence of  the strengthening of the measures inside the 
EU. Options 3 and 4 include the application of a look-through approach for entities and legal 
arrangements established in non- EU jurisdictions as long as they do not apply equivalent 
measures to those to be agreed at EU level in the field of taxation of savings. 
2.3. Who is affected, in what ways, and to what extent? 
The three main actors concerned  with the application of th e provisions of the Directive 
are: market operators, competent authoritie s of Member States and individuals resident 
in one Member State that obtain payment interests from paying agents in another Member State. 
Market operators  in the financial services sector ar e affected. This goes particularly for 
those who are obliged to act as paying agents, i.e., who are the last link in the chain of 
payments to an individual beneficial owner a nd therefore are obliged to report interest 
payments or to levy a withholding tax under th e 2003 Directive (or the related Agreements). 
Some categories of market operators can be af fected even when they do not act as paying 
agents. This is at present the case of UCITS that have to ensure that paying agents receive the 
information on the origin of their income and the composition of their assets which is 
necessary for correctly applying the provisions to  interest payments. 
It is difficult to provide exact  figures of market operators w ho at present apply the provisions 
of the Directive in one way or  other. Concerning the trade associations represented in the 
Expert group, one can note that the Europ ean Banking Federation (EBF) represents the 
interests of over 5,000 Europ ean banks, large and small, from 29 national Banking 
Associations (25 Member States plus 4 non-EU  Member States), whilst the European Fund 
and Asset Management Associa tion (EFAMA), through its 23 na tional member associations 
and over 40 corporate members, represents  about EUR 15 trillion in assets under 
management, of which EUR 7.5 trillion is  managed by around 46,000 investment funds 
(according to the figures provided by EFAMA in 2007).  
In order to make an assessment of the admini strative cost incurred by paying agents for the 
application of the provisions of the 2003 Directiv e, the Commission services asked the market 
operators' Associations repres ented in the Expert Group to provide information on costs 
incurred in connection to the implementation of  the 2003 Directive. It has nevertheless proved 
to be difficult for these Associations to get comprehensive figures from their members that can be considered as representative of the situ ation of all the paying ag ents established in all 
Member States. The feedback received by va rious Associations from their members on 
estimates of specific start-up costs and annua l recurring costs incurred by them was not 
sufficient to make any statistically firm conc lusions and to provide the Commission services 
with reliable answers. For information, the av ailable figures on the costs incurred by paying 
agents while applying the provi sions of the Directive sin ce 2005 are presented below: 
 
EN 11   EN 2.3.1.  Average start-up costs for the first app lication of the national measures for 
implementing the Savings Directive2 
Table 2: Average start-up co sts for the first application of  the national measures for 
implementing the Savings Directive 
AVERAGE 
START-UP 
COSTS PER 
BUSINESS 
UNIT 
ACTING AS PAYING AGENT
3 PER 
MEMBER 
STATE SOURCE PROFILE OF 
INDIVIDUAL 
RESPONDEN
TS MEMBER 
STATES 
DETAILS  
2005 EUR 2m -  European 
Banking Federation (EBF), based 
on responses 
from 40 paying agents in 6 MS Large banks, 
retail and private banking Reporting MSs: 
- 2 big old MSs - 3 small old MSs - 1 small new MS
2005 - Germany  
- EUR 193m 
for all credit institutions overhead 
inclusive; 
- EUR 123m 
overhead costs exclusive IW Consult 
GmbH, Study
4 
"Costs of red 
tape within the credit services sector", 
December 2006Credit 
institutions Reporting MS 
- Germany 
Recently5, the European Policy Forum presented its findings on the start-up costs of twelve 
paying agents from nine Member States (B elgium, Cyprus, the Czech Republic, Hungary, 
Ireland, Italy, Austria, Poland, the United Kingd om), plus Guernsey and Switzerland.  
It is to be noted that the data obtained by the European Policy Forum differs substantially 
from the data submitted in response to the Commission services' Quantitative Questionnaire. According to the responses received by the Euro pean Policy Forum, the implementation costs 
appear to be much lower. Ten respondents placed their start-up costs below EUR 500.000, 
which was the smallest amount provided for in  the predefined responses. Two respondents – 
indicated as being "large banks, renowned for their private wealth management businesses 
                                                
 
2 Based on data provided in response to the Quantitative Questionnaire  (see p. 1.2), published on the 
Savings Directive Review website 
3 A bank may have several business units acting as paying agent under the Directive 
4 The study was commissioned by the associations of the German banking sector. The method of 
calculating the costs is based on the standard cost model proposed and adopted by the EU to measure 
administrative costs imposed by legislation 
5 The findings of the "Savings Tax Directive review – looking at the views of paying agents and their 
compliance costs" were presented on 1 September 2008 at a Special Roun dtable during the IFA 
Brussels Congress. This review has not been submitted officially to the Commission Services. 
 
EN 12   EN according to the source" - estimated the impl ementation costs to be between EUR 2.5m and 
10m, that is the third predefined response. It should be no ted that these costs could be even 
lower than EUR 500.000 and EUR 10m, due to the range in the pr edefined responses 
permitted. 
2.3.2. Average recurring costs per annum directly lin ked to the applica tion of the national 
measures for implementi ng the Savings Directive 6 
Table 3: Average recurring costs per annum directly linked to the application of the 
national measures for implementing the Savings Directive 
AVERAGE 
RECURRING 
COSTS PER ANNUM  APPROXIMATE 
PER BUSINESS 
UNIT ACTING AS PAYING AGENT SOURCE OF 
INFORMATION PROFILE OF 
INDIVIDUAL 
RESPONDENTS MEMBER 
STATES 
DETAILS  
2005 EUR 100.000 EBF7, based on 
responses from 6 
paying agents in 2 countries Large banks, retail 
and private banking Reporting: 
- 1 big old MS - 1 small new 
MS 
2006 EUR 100.000 EBF, based on 
responses from 36 paying agents in 3 countries Large banks, retail 
and private banking Reporting: 
- 1 big old MS - 1 small old MS- 1 small new 
MS 
2007 EUR 100.000 EBF, based on 
responses from 16 
paying agents in 3 
countries Large banks, retail 
and private 
banking Reporting: 
- 1 big old MS 
- 2 small old 
MSs 
 
The study of the European Policy Forum incl uded as well a question on the average annual 
compliance costs arising from the implementation of the Directive. The responses it received also vary from the data obtained by the Comm ission Services so far. Thus, 11 respondents 
estimate these costs below EUR 1m, being the sma llest amount provided for in the predefined 
responses permitted and only 1 respondent as sesses this amount between EUR 1 – 2.5m. 
However, it should be noted that  these costs could even be lo wer, due to the range in the 
permitted predefined responses, especially the high level of the lowest amount (EUR 1m). 
                                                
 
6 Based on data provided in response to the Qu antitative Questionnaire (see p.1.2), published on the 
Savings Tax Directive website 
7 Set up in 1960, the European Banking Federation represents the interests of over 5000 European banks, 
large and small, from 29 national Banking Associations, with assets of more than EUR 20 000 billion 
and over 2,3 million employees. 
 
EN 13   EN In response to the Commission Services' Quantitative Questionnaire , The European 
Association of Public Banks stated that it di d not receive sufficient feedback allowing it to 
make any statistically firm conclusion. The European Fund and Asset Management 
Association also replied that the data requir ed is not available to it. Furthermore, the 
International Swaps and Derivatives Associatio n responded that the information required is 
sensitive, not readily available to its members and would require significant effort on the part 
of the industry to answer. The Society of Trus t and Estate Practitione rs drew attention to 
potential problems with incomplete data for discretionary trusts, which could lead to 
misleading conclusions. 
On the basis of the above, it is currently not possible to provide any additional data on the 
start-up and compliance costs resulting from the application of national measures for implementing the 2003 Directive. This fact makes it difficult to estimate  the costs that would 
be incurred by current paying agen ts, and by possible new paying agents, in the case of any 
possible amendment to the Di rective to extend its scope. 
Member States  are affected given that the aim of the 2003 Directive is to en able them to levy 
the taxes that rightfully should accrue to them and thus to safeguard their revenue and the 
financing of their budgets. They are also affect ed through the bilateral Agreements they have 
concluded with the ten dependent and associated territories in relation to the same measures. 
The following tables, extracted from the Co mmission Staff Worki ng Document SEC(2008) 
2420 , present the available figures on the intere st payments and sale s proceeds reported by 
Member States using information exchange an d the tax revenue shared by Member States 
applying a withholding tax during the second half of 2005 and 2006: 
Table 4: Interest payments and sales proceeds re ported by countries using information exchange 
EU Member States 2nd half 2005 2006
Cyprus n.a. n.a.
Czech Republic n.a. 17.81Denmark n.a. 1.16Estonia n.a. 4.40Finland n.a. 7.19
France 568.14 1512.54
Germany 660.73 1,392.06Greece 6.85 23.11Hungary n.a. n.a.Ireland 258.87 770.72Italy n.a. n.a.
Latvia 0.18 0.65
Lithuania n.a. 0.09Malta 1.02 2.10Netherlands n.a. 795.69Poland 0.07 0.61
Portugal n.a. 0.56
Spain n.a. n.a.Sweden n.a. n.a.Slovenia n.a. 1.35Slovakia 1.87 4.76
United Kingdom 9,132.49 n.a.
Total reported 10,630.22 4,534.48
in million Euro
n.a. (not available) 
 
EN 14   EN  
If the very conservative assumption is made that the United Kingdom  collected a similar 
amount for the fiscal year from 5 April 2006 to  30 June 2007 to what it collected for the 
period between 1 July 2005 and 4April 2006,  the total amount for 2006/2007 would be 
15,492.40 million Euros. It is important to high light that the total amounts do not include 
some potentially important countries such as Spai n or Italy for which data have still to be 
made officially available. 
Table 5: Tax revenue shared by countries with withholding tax regimes 
EU Member States  2nd half 2005 2006
Austria  9.48 44.32
Belgium  7.51 25.92Luxembourg  35.90 124.59
Total  52.89 194.83
in million Euro
 
The figure of 194.83 million in th e second table corresponds to 75% of the withholding tax 
collected by the countri es applying the withholding tax system. 25% of the total amount 
collected is kept by the Member  State levying the withholding tax. Therefore, the total tax 
withheld in 2006 by the three Member States  that apply a withholding tax during the 
transitional period is about 194.83 m x 4/3, i.e. about 260 m. Si nce the withholding tax in 
2006 was 15%, the total withholding tax represen ts a total interest payment of about 260 x 
100 / 15 = 1,773 m EUR or about 1.8 Billion EUR. 
Finally, individual taxpayers (beneficial owners)  are affected, although mostly in an 
indirect way as far as the 'honest taxpayers' are concerned, as the measures only aim at ensuring that they fulfil their obligations und er their domestic tax rules relating to savings 
income These honest taxpayers have an actual  interest in a correc t functioning of the 
Directive, which can limit tax evasion and creat e the conditions for a balanced distribution of 
the tax burden.  
However, there are certain rules which more di rectly affect individual taxpayers when it 
comes to the procedures for avoiding the le vying of withholding taxe s: the 2003 Directive 
provides for two possibilities in this respect,  the so called voluntar y disclosure and the 
possibility of providing a cert ificate issued the Member Stat e of residence. Two of the 
Member States transitionally levying withholding tax have only provided for the latter 
procedure in their implementing legislation. This  means that a benefici al owner wanting to 
avoid the withholding tax cannot simply authorise the paying agent to report the income but is 
obliged to get a specific certificate from the tax administration of his/her Member State of 
residence and provide that cer tificate to the paying agent. If the beneficial owner has 
difficulties in obtaining this certificate, the with holding tax is levied and can only be credited 
or refunded to him/her by the Member State wh ere he/she is actua lly resident for tax 
purposes. With this certificate pr ocedure, there can be situations  where an individual who isn't 
actually resident for tax purposes in the EU coul d bear the withholding tax. It follows that this 
procedure is not compatible with even limite d measures aimed at preventing a misuse of 
intermediate structures located outside the EU.  
According to Member States, the number of be neficial owners reside nt in another Member 
State for whom their paying agents reporte d interest income in 2007 was 2,051,127. This 
 
EN 15   EN figure could include the same beneficial owne r counted a number of times for different 
interest payments, in the absence of a more extensive use of the Tax Identification Number to identify the beneficial owner – See below the options 2 , 3 and 4.  
2.4. How would the problem evolve , all things being equal? (N.B. Scenario(s) should 
take into account actions already take n or planned by the EU, Member States 
and other actors). 
Any delay in finding an agreement between Member  States (and, to the ex tent necessary, with 
non-EU territories and countries), on solutions  for ensuring fairer and more consistent 
coverage of the savings taxation measures, c ould result in increased  market distortions 
between comparable products and vehicles. 
In this context, it is also worth mentioning th at domestic tax systems have evolved over the 
last few years to assimilate th e treatment of income from so me types of innovative financial 
products to interest from debt claims. 
For the three Member States entitled to the tr ansitional regime (as well as for those non-EU 
territories and countries appl ying a withholding tax under the savings Agreements) the time 
constraint is of particular importance since th e risk of distortion between comparable products 
will increase as the rate  of the withholding tax, which was set at 15% for interest payments 
made until end June 2008, and which increased to 20% from that date on, will increase to 
35% on interest payments made on or after 1 July 2011. 
2.5. Does the EU have the right to act – T reaty base, 'necessity test' (subsidiarity) 
and fundamental rights limitation? 
The evaluation of the 2003 Directive under the "'necessity test" and "fundamental rights' 
limitation" remains valid for the proposed amendm ents. In similar terms, the principle of 
proportionality is also very relevant for the eval uation of the Directive in  view of any possible 
amendments to its provisions. In compliance with  this principle, any possible action to amend 
the Directive and to extend its scope has to be  limited to what is necessary to achieve the 
objectives set in Section 3. 
The 2003 Directive is based on Articl e 94 of the EC Treaty and covers cross-border  savings 
income and ensures a common approach  for the reporting and, transitionally, for the levying 
of withholding tax, on such income. Such a comm on approach is particul arly important since 
the measures rely on the paying agents (i.e. on ma rket operators) for thei r application, and this 
would not be ensured through action at Member  State level, which would also be less 
transparent.  
The performance of Member States' tax syst ems could be significantly improved by more 
effective co-operation between Member States, a nd this could in turn help to keep economic 
activity and 'mobile' assets in the European  Union, while avoiding the risk of further 
increasing the tax burden on less mo bile bases such as labour. 
The Community is a signatory to  the Agreements with the five  European non-EU countries on 
equivalent measures to those of the 2003 Directive. Furthermor e, all Member States have 
concluded bilateral Agreements with the ten depe ndent and associated territories providing for 
the same measures as those of this Directive.  
 
EN 16   EN It should also be mentioned that pursua nt to Council Conclusions of 23 October 2006 , the 
Commission has been asked to conduct explorat ory talks with other important financial 
centres (Hong Kong, Singapore and Macao) with an aim to further extend the geographical scope of the savings taxation measures.  
Consideration has been given to aligning the forthcoming proposal to strengthen the general 
framework of administrative cooperation in  the area of direct taxation provided for by 
Directive 77/799/EEC (as amended) on the positi ons taken in relation to  the amendments to 
the 2003 Savings Directive. – See 4.1, option 3  and option 4 . 
3. S
ECTION 3: OBJECTIVES  
3.1. What are the general policy objectives? 
The proposal aims at strengthening an already existing mechanism aimed at ensuring the 
possibility of domestic taxation of cross-bord er savings income in the Member State where 
the beneficial owner is resident in accordance with the domestic tax rules of that Member 
State. 
3.2. What are the more specific/operational objectives? 
The more specific objective of the proposal is to  close loopholes in th e existing legislation 
thus ensuring a level playing field by providi ng for consistent treatment of comparable 
situations in line with the prin ciples of the Internal Market and of fair competition between 
comparable financial products and structures.  
At the same time, the proposal provides the payi ng agents with tools to perform their tasks in 
a less burdensome manner; it thus seeks to  reduce the scope (or need) for subjective 
judgements, thereby enhancing legal certainty, something which the market operators have 
been pressing for. 
3.3. Are these objectives consistent with other EU policies and, if applicable, 
horizontal objectives, such as the Lisbon and Sustainable Development 
strategies or respect for fundamental rights? 
The proposed amendments are coherent with the renewed Lisbon Strategy and address the 
need to preserve the competitiveness of the EU  financial operators in the global market. 
Particular attention has been devoted to limiting any additional administrative burden on EU market operators and, where possible, to reduc e the burden already put  by the 2003 Directive 
on some of them.  
4. S
ECTION 4: POLICY OPTIONS  
4.1. What are the possible options for meet ing the objectives and tackling the 
problem? Description of the different options 
When assessing the various options, it should be kept in mind that the 2003 Directive 
essentially relies on paying agents for the execu tion of its provisions. Therefore, due account 
has to be taken of the Lisbon Strategy and the better regulation initiativ e, which involves, for 
example, reducing administrative burdens on and unnecessary costs for businesses. Member States should therefore be prepared to  explore solutions whereby any additional 
 
EN 17   EN administrative burden for making the provisions of the Directive more effective would be 
placed as far as possible on the tax administratio ns, which would benefit from an increase in 
tax revenue, or on market operato rs that are currently less i nvolved, rather than on those 
market operators (such as banks and asset managers) that already make an important 
contribution to the functioning of the Directiv e. Therefore, and taki ng into account possible 
additional costs for some of the operators and/or  competent authorities of Member States, the 
principle of proportionality has to be particul arly considered when assessing the different 
options. 
Another constraint is the relatively limited territo rial coverage of the 2003 Directive as well as 
of the Agreements providing for the same or equivalent measures.  
The Commission continues to pur sue the objective of promoti ng the application, by important 
non-EU financial centres, of meas ures equivalent to those app lied by Member States and third 
parties participating in the savings taxation m echanism. However, as long as the geographical 
coverage of the savings taxation measures remains limited, it is also usef ul to consider, while 
having due regard to th e free movement of capital laid do wn in the EC Treaty, whether 
measures should be taken aimed at tackling th e attempts of EU resi dent individuals to 
circumvent the 2003 Directive by channelling in terest payments, made in the EU, through 
“shell” entities or arrangements located outside the territory of the EU and of the jurisdictions 
cooperating with the EU.  
The consultations with business and national administrations have mainly focused on the 
analysis of three essential elements of the Di rective which have a de cisive influence on its 
effectiveness, irrespective of the system unde r which the Directive is applied: (i) the 
definition of the beneficial owner; (ii) the de finition of the paying agent and its obligations; 
and (iii) the definition of 'savings  income'., and in particular that of an 'interest payment'.  
A balanced solution thus needs to take into account all the three essential elements referred to 
above, namely “beneficial owner”, “paying agent” and “savings income in the form of interest 
payments”, as well as the administrative burden  on paying agents and on Member States, the 
need to safeguard Member States' tax revenue and the competitiveness of the EU financial sector. 
It should be recalled that the original choice to exclude all innovative financial products from 
the scope of the Directive (ECO FIN Council conclusions of May 1999
 and November 2000 ) 
was accompanied by an express statement that  this issue should be re-examined on the 
occasion of the first review of  the Directive, the aim being to find a definition covering all 
securities that are equivalent to debt claims so  as to ensure the effectiveness of the Directive 
in a changing environment and to prevent market distortions. 
In addition to the above considerations there is the need for statistics in order to assess the 
functioning of the Directive. 
Basically four main options  have been considered, option 1  being that of no action. Unlike 
option 2,  which consists of closing unintentional loopholes and better c overage of savings 
products in line with th e unanimous Council conclusions of 27 November 2000, options 3 and 
4 would mean a clear extension of th e scope of the 2003 Directive. Under options 3 and 4  
there are in reality a number of  choices. The possibility of in cluding a limited number of legal 
persons could be discussed in connection with option 3 (e.g transparent entities and entities 
 
EN 18   EN established in third jurisdictions that are not subject to taxation). For option 4 , various 
combinations of 'savings products' could be considered.  
Option 1 – No action  
This option means that no amendments would be introdu ced into the 2003 Directive. The 
scope would remain more limited than was inte nded according to the Council conclusions of 
27 November 2000. Nor would the unintentional loopholes be clos ed, and there would be no 
reduction in the curren t administrative burden. 
Innovative financial products [ including structured securities]  were excluded from the 
scope of the 2003 Directive, and they would remain so.  
Furthermore, in spite of certain evidence of mark et distortions, due to inconsistent treatment 
of similar savings produ cts (for instance incorporated a nd non-incorporated non-UCITS), no 
action would be taken. 
It would be worth mentioning that the Europ ean Banking Federation (EBF), which represents 
most of the paying agents involved in the applic ation of the Directive across the EU, noted in 
its comments of 3 July 2008 that its members "s hare the opinion that the Directive remains 
unclear as for (i) the definition of 'interest paym ent' and 'paying agent', (ii) the definition of 
'residual entities' and (iii) th e formulae that may be used in different member states to 
determine whether a fund or a particular fund ev ent falls under the Directive". The EBF also 
emphasised the importance of a level playing fiel d covering the transactions which fall under 
the scope of the Directive. 
Option 1 would also not ensure that the problem of  lack of statistics from Member States is 
solved. Statistics would continue  to be provided on an almost voluntary basis as provided by 
the Council conclusions of 26 May 2008. 
Option 1 Action 
No action Maintaining the status quo, i.e. "Do nothing" 
Option 2 – Amendments to ensure a better implementation of the unanimous agreement 
reached by the Council on 27 November 2000 about what should be the substantial content 
and aim of the Directive  
The Directive builds on the consensus reached at  the Santa Maria da Feira European Council 
of 19 and 20 June 2000 and the subsequent Ecof in Council meetings of 26 and 27 November, 
13 December 2001 and 21 January 2003. 
The 27 November 2000 Council meeting conclusi ons outlined the key principles of the 
Directive as adopted in 2003. Acco rding to these conclusions th e following types of income 
should be exclusively considered within th e scope for the purposes  of the Directive: 
a) Paid or account-registered interest relati ng to debt claim of every kind, whether or 
not secured by mortgage or whether or not  carrying a right to participate in the 
debtor's profits, and in particular income  from Government s ecurities and income 
 
EN 19   EN from bonds or debentures, including premiums and prizes attaching to such 
securities, bonds or debentures. Penalty char ges for late payments are not considered 
as interest; 
b) Accrued interest relating  to products referred in a); 
c) Capitalised interest relating to capitalisation products; d) Income distributed by distribution coordi nated UCI invested ex clusively in rate 
products; 
e) Income distributed by mixed distribution coordinated UCI; 
f) Income relating to investments in coordi nated capitalisation UC I more than 40% of 
the assets of which are invested in rate products, this threshold being lowered at the 
end of the transitional period to a le vel to be decided at a later date; 
g) Interest paid directly to or credited to an account held by entities such as 
uncoordinated UCI ("non-UCITS"), part nerships, trusts and comparable 
undertakings. 
The main text of the above mentioned 2000 Counc il conclusions ex plicitly indicates that the 
definition of paying agent must also cover "interest payments relating to the direct 
management of a portfolio or indirect mana gement of a portfolio, whether by investment 
funds or similar investment structures (par tnerships, trusts, inve stment clubs, etc.)". 
According to the following more detailed desc ription made by the conclusion, this objective 
should be ensured through the application to some  "entities" without le gal personality and not 
subject to taxation of th e special rule of payi ng agent on receipt. Howe ver, neither the Council 
conclusions nor the 2003 Directiv e seem to reflect an accurat e consideration of the legal 
nature of trusts and of some partnerships, which are not entities bu t legal arrangements and 
cannot therefore be covered by the special rule of Article 4.2 of the 2003 Directive if the legal 
text only refers to entities and not also to legal arrangements.  
A similar inconsistency arose for investment f unds established in the EU. The lack of an 
explicit reference to non-UCITS with legal personality (like SICAVs ) gives the result that 
interest income channelled through them is ke pt out from the scope whilst non-incorporated 
non-UCITS with the same composition of assets  are always covered by the 2003 Directive, 
either as paying agents on receipt, or by havi ng their income taken into consideration as 
income from authorised UCITS. 
Option 2 basically means using the 27 November 2000 Council conclusions
 on what should 
have been the content of the then future Directive as a benchmark, seeking to close 
unintentional  loopholes and extending the scope only to include savings products which are 
equivalent to debt-claim products and which it was the intention to cover according to the main principles stated in the unanimous C ouncil conclusions. This would mean amending the 
2003 Directive to cover all the EU collectiv e investment vehicles (both UCITS and non-
UCITS) irrespective of their le gal form, so avoiding the current  inconsistent treatment of non-
UCITS (incorporated vs . non-incorporated). 
Furthermore, option 2 consists of extending the rule of paying agent upon receipt of Article 
4.2 of the Directive to the case of interest pa yments made not only to entities but also to 
arrangements (such as trusts) as it was in principle the Council's intention in 2000. 
 
EN 20   EN The amending proposal is also the occasion to  take into account some suggestions from 
market operators like EBF (notably the "home c ountry rule" for treating investment funds or a 
clearer exclusion of those ba nks which passively receive a payment on behalf of their 
customers from the paying agent obligations). 
On the other hand, in the same way as for option 1 , innovative financial instruments would 
not be included, nor would any insurance product s, regardless of whether they cover virtually 
no risk and are of such a character  that they could be assimilated to debt claims, or to UCITS 
and non-UCITS. 
In its comments of 1 October 2007  (relating to a Commission working document) and 10 
September 2008, the European Fund and Asset Management Association, EFAMA, stated 
that "if the scope of the Directive is to be extended to cover non-UCIT S, it must be ensured 
that similar competing products targeted to retail investors, in particular  structured bonds and 
unit-linked insurance products are included as well". It pointed to the Ecofin Council 
conclusions of 8 May 2007 , inviting the Commission to review the consistency of EU 
legislation regarding the different  types of retail investment products, so as to ensure a level 
playing field, and it went on to say that the Commission should have this in mind also when 
regulating tax issues. 
The number of new actors that would be con cerned by option 2 is difficult to estimate. In 
principle, the proposed amendments would only affect incor porated non-UCITS and trusts or 
similar arrangements established in a Member State.  
Option 2 Action 
Amendments to ensure better 
coverage according to the Council conclusions of 27.11.2000 
 Limiting the administrative burden for 
paying agents in th e respect of the 
same conclusions  Extension to all collec tive investments vehicles 
Extension of paying agent on receipt rule to 
arrangements (trusts)   "Home country rule" and so lution to th e "passive 
receipt" issue 
Option 3 – The same amendments as those under option 2, in combination with amendments to close loopholes and extend the coverage to certain other products which 
can be assimilated to debt claims or to in terest-bearing instruments, notably certain 
insurance products with virtually no risk protection  
Option 3 would mainly involve the solutions be low. The opinion of market operators and of 
the competent authorities of Memb er States has been considered  before presenting this option. 
The annex to this document provides a table with the positions of market operators and Member States in relation to the proposed am endments as discussed during the consultation 
period described in 1.2. As mentioned above (2.5)  consideration has been  given to aligning 
the forthcoming proposal to strengthen the ge neral framework of admi nistrative cooperation 
in the area of direct taxation under Directive 77/799/EEC (as amended) on the positions taken 
in relation to the amendments to the 2003 Savings Directive: 
 
EN 21   EN – extending the scope of the 2003 Directive to 
– include securities which are equivalent to debt claims from the point of view of 
the investor, because virtually all of the capital invested is pr otected at the end 
of the duration of the contract, and becau se the return on capital is defined at 
the issuing date although th e product is not formally composed of debt claims; 
– include those life insuran ce contracts providing for very low biometric risk 
coverage and investing the capital in debt-claims, units/shares in investments 
funds or equivalent securities. 
Extending the scope to other savings produc ts that are percei ved by investors as 
comparable to debt-claims because of thei r low risk and their capital protection was 
discussed with market associations in order to avoid administrative burdens on 
paying agents. A reference to the "substance over form" principle for identifying these products was first suggested by the Comm ission as a more flexible approach to 
developments in the financial markets. Ho wever, economic operators objected to an 
open reference in the Directive to this principle arguing that it is not very feasible in practice. Other alternatives, su ch as lists of products to  be included under the scope 
of the Directive and to be subject to revi ew under a comitology procedure, were also 
dismissed because any procedure to update the list would be time consuming and not 
effective. Therefore, leaving aside th e above solutions, option 3 would involve 
extending the scope to specific products that meet certain objective criteria, easy to 
be checked by paying agents that have not pa rticipated in the crea tion of the product.  
– clarifying the situations wher e the 'paying agent on receipt' mechanism applies (cf. 
the quote from EBF above): besides trusts as  described in option 2, this rule would 
also extend to transparent entities provided with legal personality. 
These transparent entities include founda tions without charitable purposes. An 
example of the situations that would be covered is offered by Liechtenstein foundations. These legal persons are in principle covered by the agreement on savings signed with Liechtenstein as payi ng agents at the moment when they make 
an interest payment for the benefit of an i ndividual resident in the EU. However, in 
practice, payments made by these foundations ca n very rarely be qualified as interest 
payments. The most effective way to ensure  that interest income obtained through 
them by an individual is fully caught is  obliging the foundation to act as a "paying 
agent on receipt". 
In order to facilitate the tasks of  economic operators , a positive list
 with the entities 
and arrangements to be considered as payi ng agents on receipt would be included in 
the annexes to the Directive as suggest ed by market operato rs' associations 
represented in the Expert Group on Savings. 
– introducing a 'look-through approach' in relatio n to selected jurisd ictions outside the 
EU in order to ensure th at the savings taxation meas ures cannot be avoided or 
circumvented by channelling payments thr ough entities and legal arrangements in 
those jurisdictions which are not  effectively taxed there.  
The 'look-through approach' consists of aski ng paying agents established in an EU 
Member State who are subject to th e application of anti-money laundering 
 
EN 22   EN obligations, to use the information already available to them w ithin this framework, 
insofar as it relates to the actual benefici al owner(s) of a paymen t made to specific 
kinds of legal persons or arrangements esta blished in selected jurisdictions outside 
the EU, where appropriate and effective taxation of interest income paid to these kinds of legal persons or arrangements is no t ensured. An indiscriminate extension of 
this approach, to all entities and legal ar rangements in the EU, even if it refers to 
information already available to the paying agent, does not seem to an appropriate 
and proportionate solution as market opera tors' associations have pointed out. A 
selective approach concerning only payments to some non- EU legal structures could 
be easier to implement as it could be auto matically applied through IT resources and 
would not raise the risk of duplicating pa ying agent responsibilities on the same 
interest payment within the EU. The paying agent would not need any cooperation of the selected jurisdictions outside the EU, as  it would use the results of the Customer 
Due Diligence which it is already obliged  to perform under the Third Anti-Money 
Laundering Directive (also applied in Li echtenstein as part of the EEA).  
As in the case of paying agents on receipt, a positive list with categories of entities 
and arrangements, resident in non-EU jurisdictions which do not ensure their 
appropriate and effective ta xation, would be in cluded in the Annexes to reduce the 
uncertainties and limit the administrative burden. 
Updating of the lists established for applying  this option (paying agents on receipt and 
untaxed entities/ arrangements in third jurisdic tions) would require regular amendments of the 
directive or, as a more practical alternative and as proposed under this option, the use of a 
committee with limited delegated powers. 
Option 3 would include some further minor change s to facilitate the operation of the Directive 
for beneficial owners (elimination of the certificate procedure to avoid the transitional withholding tax in 3 Member States) and to ob tain a more accurate and updated establishment 
of their residence as well as of their tax iden tification number (if an y) on the basis of the 
information already available to the paying agent. In order to solve the problem of lack of 
information, MS would be required to submit to the Commission certain st atistics on a yearly 
basis. 
In addition to the new actors under option 2, the proposed amendments under this option 
would involve some life insurance providers. Ho wever, taking into account the specifically 
targeted life insurance contracts and the fact that  the paying agent in th e Directive is the last 
payer in the chain of payments (so it could be  a bank already involved in the operation of the 
Directive rather than the lif e insurance company), the numbe r of new actors concerned as 
paying agents should be rather limited.  
 
EN 23   EN Option 3 Action 
Amendments to ensure extension of 
the current scope, to close loopholes and include some further savings products Extension to all collective investments, securities 
equivalent to debt claims  and life insurance products 
with low biometric risk 
Extension of the paying agent on receipt rule to 
arrangements (trusts) and certain transparent entities with legal personality  (such as foundations) 
Look through approach for payments to certain 
structures established in certain third jurisdictions 
Other amendments: making more use of the available 
information for establishing the residence of the beneficial owner and eliminating the certificate procedure  
Option 4 – Amendments to enlarge the scope of  the Directive to include all legal persons 
and further savings products such as, notabl y dividend payments, any financial capital 
gains and/or insurance products. 
At the Ecofin Council in March 2008, a number of  Member States expr essed their wish to 
extend the scope of the Savings Directive be yond the Council conclusions of 27 November 
2000  and to include payments to legal persons and all other types of investment income 
(dividends, capital gains, “out payments” from  genuine life insurance contracts and pension 
schemes etc.).  
There are certain constraints to be considered as far as an extension of the scope to all savings 
products is concerned.  
As mentioned, there are, transitionally, tw o different mechanisms in place under the 
Directive, automatic information exchange and the levying of a withholding tax. Withholding 
tax is not a suitable mechanism unless the net  income to be taxed is known. While this is 
usually the case for interest income in the hands  of individuals, it is but rarely so for some 
other forms of income, e.g., capital gains. Also, the rules on capital gains taxation vary 
considerably between Member States, as well as  between different types of capital gains. 
Against this background, the levy ing of a withholding tax on the full sales proceeds would be 
disproportionate. Thus information exchange would appear, prima facie, to be the only 
mechanism which would be suitable for such savings products. 
Under option 4  the question therefore arises whether it would be appropriate to include all of 
the above savings products or only some (or on e) of them within th e scope of the savings 
taxation measures; one dimension of the question is to what ex tent the 2003 Directive is the 
appropriate instrument or a strengthening of the cooperation within the framework of 
Directive 77/799/EEC on mutual assistance would be a more appropriate instrument in order 
to prevent the unlawful non-report ing of these types of income by taxpayers in their state of 
residence.  
Enlarging the scope to include dividends, especi ally if this includes dividends to corporate 
beneficial owners, as suggested by at least one Member State, could lead to multiple reporting 
 
EN 24   EN and to multiple layers of withholding tax. In pa rticular, where there is an obvious risk of 
multiple layers of withholding tax, the gene ral framework for administrative cooperation 
(Directive 77/799/EEC as amended), which bu ilds solely on information exchange, would 
seem more appropriate. 
Option 4 Action 
Achieving the widest possible 
coverage of payments of savings income without any selectivity  Extension of the scope to payments to all legal 
persons and to all types of investment income (dividends, capital gains, “out payments” from genuine life insurance cont racts and pension schemes, 
etc) 
 
4.2. Which options have been discarded at an early stage and why? 
For political reasons, the option of repealing th e 2003 Directive has never been on the table. It 
took around ten years of discussions and negotiati ons to get the measures into place. They 
have only been in operation for three years. And th is is the first review process, with another 
one due in three years' time. Furthermore, the Community and its Member States have entered 
into international Agreements on the same , or equivalent, meas ures. Currently, 42 
jurisdictions are thus  covered by the savings measures , and exploratory talks on such 
measures are ongoing with yet ot her jurisdictions, and negotiati ons are about to be launched 
with Norway. 
In addition, it should be mentioned that the economic evaluation carried out (see SEC 
(2008)2420)  shows a small shift in depos its of non-bank depositors from countries within the 
scope of the 2003 Directive towards third countries  but it is impossible to link it directly to 
the implementation of the Direct ive as this development gra dually took place in the years 
before the 2003 Directive came into force.  
5. SECTION 5: ANALYSIS OF IMPACTS  
5.1. Impacts of the different options 
Option 1 – No action 
Impacts from the point of view of : 
a) Market operators (paying agents) : Even if in principle the no action option would 
avoid any new administrative costs for paying agents, the absence of clarity in the 
application of some of the current provision s of the Directive is also a problem for 
paying agents such as the lack  of an explicit refe rence to a home country rule in the 
case of payments obtained through UCITS or the application of the special rule of 
paying agent on receipt of Artic le 4.2 of the Directive. 
Furthermore, some of the existing loophol es in the Directive provide beneficial 
owners with incentives to invest in some products or through certa in structures that 
have nothing to do with their financial re turn. By this, investors undermine fair 
 
EN 25   EN competition in the industry at EU level and with third countries which leads market 
distortions. As explained above the EBF has highlighted these problems to the 
Commission in the context of the Expert Group on savings taxation.  (See description 
of option 1 in section 5.1)  
b) Competent authorities (Member States):  Current loopholes in the Directive result 
in budgetary losses that exceed any necessa ry administrative costs that could be 
involved by amending the Directive. Member States have underlin ed that according 
to their experience the lack of complian ce by their taxpayers when it comes to cross-
border savings income leads to a loss of tax revenue which may be substantial.  
c) Individuals (beneficial owners): Indirectly, the continued existence of some 
loopholes in the Directive would have a nega tive impact in terms of fiscal pressure 
on diligent taxpayers and on taxpayers whos e main income is subject to closer 
controls (i.e., labour income).   
Option 2 – Amendments to ensure a better implementation of the unanimous agreement 
reached by the Council on 27 November 2000 about what should be the substantial content 
and aim of the Directive  
Impacts from the point of view of : 
a) Market operators (paying agents) : The introduction of th e amendments would not 
involve onerous administrative costs for paying agents already covered by the 2003 
Directive. Paying agent obligations woul d be imposed on some further market 
operators who would then incur administra tive costs. However, their number would 
be relatively limited. The extension of the pr ovisions of the Directive to incorporated 
non-UCITS would have a positive impact on competition in the investments funds 
industry, but would leave a competitive advantage to other products not covered under the Directive.  
b) Competent authorities (Member States):  The introduction of the proposed 
amendments would not be ex ceptionally onerous for the competent authorities. Any 
necessary costs should normally be outwe ighed by the positive impact on the budget 
because the coverage would be more complete.  
c) Individuals (beneficial owners): Indirectly, reduction in th e negative impact on 
diligent taxpayers and on taxpayers whose main  income is subject to closer controls 
by increasing tax revenues from products and arrangements to be covered under the 
Directive (more horizontal equity). In ac cordance with the prin ciple of horizontal 
equity,
 taxpayers who have the same level of similar income should pay the same 
amount of taxes . 
Option 3 – The same amendments as those under option 2, in combination with 
amendments to close loopholes and extend the coverage to certain other products which 
can be assimilated to debt claims or to in terest-bearing instruments, notably certain 
insurance products with virtually no risk protection  
Impacts from the point of view of : 
a) Market operators (paying agents) : Current paying agents would have to incur 
administrative costs to adapt their syst ems to the new scope of the Directive 
 
EN 26   EN (structured products and look- through approach). Paying ag ent on receipt obligations 
would be given to transparent entities with  legal personality. Furthermore, since new 
products would fall within the scope (suc h as life insurance contracts without 
significant biometric risk coverage) new pa ying agents would have to introduce rules 
to apply, or to make possible the applicat ion of, the provisions of the Directive.  
b) Competent authorities (Member States):  Similarly to option 2, the introduction of 
the proposed amendments w ould involve administrative costs, but, again, these 
should normally be compensated through a mo re effective collection of tax revenue 
due.  
The amendments regarding payments to le gal entities and arrangements established 
outside the EU would better a lign the requirements of identification of beneficial 
owners under the 2003 Direc tive with those foreseen for anti money laundering 
purposes. Through this, third countries that act as shelters for EU residents would 
also be caught under the Directive.  
The amendments regarding abolition of one  of the two procedures to allow non-
payment of withholding tax, namely exemption on the basis of a certificate submitted by the beneficial owner, would result  in an additional burden for the tax 
administration of the State of the paying ag ent by the compulsory application of the 
voluntary disclosure and automatic inform ation exchange procedure. However it 
would be more than balanced by the reduced  burden on the State of residence of the 
beneficial owner as well as on the beneficial owner himself.  
c) Individuals (beneficial owners): Indirectly, as the result of closing the identified 
loopholes, positive effect on horizontal equity  between capital income and other type 
of income less movable and therefore, s ubject to closer supervision by the tax 
authorities.  
Positive effect on the beneficial owners concerned of the elimination of the 
certificate procedure. 
This option should ensure a fair er treatment between comparable  products of the "interest 
family", thus reducing existing and potential distortions, and should improve the breadth of 
information available to MS administrations, th us improving their possibilities to collect tax. 
Costs for operators and administ rations should be reduced where clarifications are being made 
to procedures.  
Option 4 – Amendments to enlarge the scope of  the Directive to include all legal persons 
and further savings products such as, notabl y dividend payments, any financial capital 
gains and/or insurance products 
Impacts from the point of view of
: 
a) Market operators (paying agents) : This option would clearly involve more 
administrative costs for paying agents at the level of IT resources. The same interest payment could be reported many times. So me market operators in exchange of 
information countries expressed neverthe less sympathy for solutions which would 
not oblige them to make any selection of the information to be treated. 
 
EN 27   EN b) Competent authorities (Member States):  The introduction of the proposed 
amendments could be excessively onerous for the competent authorities because of 
possible redundant information received at  different stages on savings income. 
Furthermore, Member States that do not al ready have in place a system to collect 
information on payments of income that can be classified as dividends, capital gains 
and/or insurance products, will have more cost s for the application of the new rules.  
c) Individuals (beneficial owners): Indirectly, more enhanced positive effect than in 
option 3 on horizontal e quity, if Member States are able  to correctly treat the mass of 
information received. 
As explained in the description of the option, the main pitfall is the possibility for 
redundancies of information and multiple layers  of withholding taxes (which would almost 
certainly impose the abandonment of the transitional provisions at  least on the new categories 
of income and payees covered) and the potentially disp roportionate administrative burden this 
could impose.  
Other effects  
As in option 2 and 3, the amendments would have an impact on the agreements signed with 
non-EU jurisdictions for the application of the same or equivalent measures. (See "other 
considerations" below). Unlike in options 2 and 3, where the scope and functioning of the 
Directive is not substantially modified, in the case of option 4 any negotiation with third 
jurisdictions for a review of the Agreements , notably those agreements based on the levying 
of a withholding tax, would be sign ificantly difficult and delicate.  
 
EN 28   EN 5.2. Table 6: Impact table 
Options Affected 
parties Effect
Direct: 
D 
 
Indirect
: I Impacts 
Positive: + 
Strongly positive: ++ 
Negative: - 
Strongly negative: -- 
Neutral/marginal: ≈ Impact 
Timing 
One-off 
Short-term 
Medium-term 
Long-term 
On-going Impact 
Nature 
 
Dynamic 
Static Impact 
Likelihood
Certain 
High 
Medium 
Low 
-  
(Market distortions) On-going 
≈ 
(No additional costs) on-going dynamic 
 Market 
operators D 
- 
(Lack of clarity) One-off static high 
-  
(Budgetary loss)  
 
≈  
(no additional costs) Competent 
Authorities D 
 
- 
(poor statistics) high  
 No action 
Individuals I - 
Less horizontal 
equity on-going   
dynamic 
 
Medium 
+ 
(Less distortions) Short-term certain 
 
- 
(higher costs) On-going dynamic 
Market 
operators D 
+ 
(More clarity) One-off static high 
+ 
(Budgetary 
protection) 
-  
(Higher costs) Competent 
Authorities D 
 
+ 
(better statistics) on-going  
 high 
 Amendments 
to ensure better 
coverage 
according to the Council conclusions of 27 November 
2000
 
Individuals I + 
horizontal equity  Medium term dynamic 
Medium 
 
EN 29   EN  
++ 
(Less distortions) Short-term dynamic certain 
 
- 
(higher costs) On-going dynamic Market 
operators D 
+ 
(More clarity) One-off static high 
+ 
(Budgetary 
protection) 
-  
(Higher costs) Competent 
Authorities D 
+ 
Better statistics On-going 
 high 
 Amendments 
to ensure 
extension of the current scope, to close loopholes and include some further savings products, mainly in the hands of individuals
 
Individuals I ++ 
horizontal equity  Medium term dynamic 
Medium 
+ 
(Less distortions) Short-term certain 
- - 
(Higher costs ) On-going dynamic 
Market 
operators D 
 
+ 
(More clarity) One-off static high  
++ 
(Budgetary 
protection) on-going  dynamic low 
- 
Redundancies 
 Short-term dynamic Medium 
- 
(Higher costs) Competent 
Authorities D 
 
+ 
Better statistics on-going dynamic high 
D - 
Multiple 
withholdings on-going high Amendments 
to enlarge the 
scope to legal persons and to a wide range of savings products 
Individuals 
I ++ 
horizontal equity Medium term dynamic 
Medium 
 
5.3. Preferred option 
In view of the above analysis, and as shown in  the summary table, the third option, i.e. to 
amend the Directive to refine the current scope, to close loopholes and include some 
further savings products, mainly in the hands of individuals and to clarify and simplify 
certain rules , appears as the best option at present. The first option (i.e. no action) should be 
rejected for not closing the cu rrent loopholes in the Directive that have a negative impact on 
public revenues and on competition in the financia l markets. Furthermore, as explained above, 
 
EN 30   EN the EBF considers that the Direc tive needs to be modified to clarify certain aspects and to 
remove the rule of paying agent on receipt unless it also applies to the agreements signed with 
Third Countries. 
In comparison with option 2, th e costs to be incurred by cu rrent paying agents and new 
paying agents should be outweighed by less distortion between products of similar 
characteristics and by a positive impact on the b udget of Member States. Furthermore, trusts 
would be treated in the same terms as foundations and transparent entities that serve as special 
purpose vehicles for inve stments by individuals. 
Option 4 would be more comprehensive than op tion 3 but its applicatio n would involve more 
costs and could also lead to redundancies of  information and to double withholding (unless 
radical changes in the functioning of the Directive are accepted by the Member States 
admitted to the transitional regime). Furtherm ore, option 4 does not seem to respect the 
principle of proportionality since the additio nal burden and costs on both the competent 
authorities and the paying agents  could go beyond what can be c onsidered to be justified to 
achieve the objectives of the Directive. This ha s to be carefully considered in the present 
difficult situation of international financial ma rkets On the other hand, the advantages that 
could be derived from option 3 would still justif y the effort for all the actors concerned and 
therefore respect the prin ciple of proportionality. 
5.4. Other (general) considerations 
The same or equivalent measures have also been applied since 1 Ju ly 2005 in 10 dependent 
and associated territories and in 5 Europ ean non-EU countries. A ny amendment to the 
Directive would not be directly  applicable to th e 15 non-EU jurisdictions. Therefore, any 
amendments to the scope of the Directive, main ly those concerning the definition of interest 
payment, the beneficial owner and/or the payi ng agent on receipt rule , would make necessary 
a review of the agreements with  the 10 dependent and associated  jurisdictions that apply the 
same measures.  
As far as the 5 non-EU countries that apply eq uivalent measures are concerned, the Council 
would have the last word on whether the agreements signed before 1 July 2005 with the 5 
countries would still provide for equivalent measur es to the amended Direc tive. However, it is 
the view of the Commission that some of the proposed amendments under option 2 and 3 
(notably those related to making more eff ective the paying agent on receipt mechanism, 
which is currently not included in these ag reements) and definitely all the proposed 
amendments under option 4, as lo ng as the scope and the functio ning of the Directive is 
substantially changed, could re quire a parallel change in the agreements signed with the 5 
non-EU jurisdictions. The kind of changes in th e agreements which would be linked to an 
extension to the agreements of option 4 would be particularly ambitious to achieve, even in 
the present political environment 
In this respect it is important to highlight that in the opinion of  the EBF, EU economic 
operators find themselves at a significant comp etitive disadvantage to economic operators in 
these 5 Third Countries because of the absence in the agreements of the "paying agent on 
receipt" rules. According to the EBF, this repres ents a serious failure to ensure a level playing 
field. Therefore, the EBF is strongly opposed to  any extension of Artic le 4.2 without agreeing 
equivalent measures with the Third Countries concerned and also calls for the abolition of 
such a rule if the absence of equivalence persists.  
 
EN 31   EN As long as the 5 non-EU jurisdictions do not pr ovide for the paying agent on receipt rule (and 
for un updating of that rule as far as the 10 dependent and associated territories are 
concerned), Options 3 and 4 pr opose to apply the look-through approach to some of the 
entities and legal arrangements established in th ese jurisdictions (such as trusts, Anstalten and 
Stiftungen) 
6. SECTION 6: MONITORING AND EVALUATION  
6.1. What are the core indicators of prog ress towards meeting the objectives 
Less tax evasion and less distortion in the financ ial markets can be considered as the main 
objectives of the amendments to the Directiv e. When it comes to measuring progress it is 
difficult to set core indicators since we may not expect in the short-term  quantification or even 
a quality assessment of these indicators. This task  will rely on the quality and availability of 
statistics to be provided by Member States and market or ganisations in the future. 
If it is difficult to have an indicator of tax evasion, increased tax revenues or increased tax 
bases corresponding to debt claim products and assimilated could be a good approximation to 
evaluate the reduction in tax evas ion in Member States. However, it has to be considered that 
other variables such as interest rates and evol ution of the real estate  market may have an 
influence on this indicator. In broad terms th e total amount of interest payments exchanged 
can be also a good indicator of the perfor mance of the Directive in this area. 
In relation to distortions in the financial ma rkets, a good indicator may be possible changes, 
from before to after the application of the new amendments, in investors'  decisions in respect 
of products covered by the Directiv e and those outside the scope.  
Other indicators are administrative costs for bot h paying agents and competent authorities and 
quality of the information exchanged. 
An improvement in the available statistics from  Member States administrations will facilitate 
any evaluation.  
The mandate of the Expert Group on Taxatio n of Savings should be extended beyond 31 
December 2008 in order to set up a sort of permanent forum to  discuss on the Directive and 
its impacts on market operators after the introduction of possible amendments to the 
Directive. If its mandate is actually extended, this group will be asked to provide data allowing examination of potential future subst itution effects between comparable products.  
6.2. What is the broad outline for po ssible monitoring and evaluation 
arrangements? 
As foreseen in the Directive, the Commission has to re port to the Council ev ery three years on 
the operation of the Directive. Th e report is the basis for any pr oposal to amend the Directive. 
As it has been the case for the first report in 2008, the Commission will start discussions with 
all the parties involved on the application of the Directive, after the amendments will be 
introduced, to follow up the impact of the amendments.  
 
EN 32   EN 7. HOW HAS THE OPINION OF THE IA BOARD BEEN TAKEN INTO ACCOUNT ? 
On 8 October 2008 the Impact Assessment Board (IAB) discussed the draft of the Impact 
Assessment (IA) report with the services of the author DG. Further to this meeting, the IAB 
adopted its opinion on the draft version of the IA on 10 October 2008. 
The recommendations of the IAB (as explained below) were considered by the author DG, 
which led the author DG to introduce a number of changes to the original draft before sending 
a second version to the IAB: 
1. Better description of the baseline scenario and of the main loopholes  in the Directive. 
Clear overview of how diffe rent actors are affected. 
Section 2 "problem definition" has been changed to provide a better definition of the current 
situation of the Directive and the main loopholes  as discussed during th e consultation process 
with Member States and market operators. A hierarchy of the identified problems has been 
included at the end of the sec tion to facilitate the understanding by the reader as to the 
different problems and their relevance. Section 2.2 has been improved to provide more details 
on the external dimension of th e Directive, on the link with  the dialogue with important 
financial centres outside the EU and the consid eration given to the ri sk of possible capital 
flights. The different options in  section 4 have been modified to provide a better description 
of the impacts  of the four options on the three main act ors in the application of the provisions 
of the Directive: paying agents , tax authorities and individual  taxpayers. The changes to the 
draft IA also include some definitions of tec hnical terms, such as "look through approach" and 
"paying agent on receipt", to make the report more comprehensible.  
2. Clear set of options in section 4 The description of the four opti ons, with solutions to the identified problems, has been moved 
from section 5 to section 4. The differences be tween option 2 and option 3 have been clarified 
by explaining in more detail the content of the Council co nclusions of 27 November 2000 
used as benchmark.  
3. Significant limitation of th e availability of data 
A new sub section 1.3 on "data availability" has been introduced to better reflect the 
information that has been received and considered in the analysis as well as to reflect the lack 
of sufficient information for a quantitative analys is and the impact of this lack. See also table 
8 in the annex. 
4. Overview of the input re ceived from stakeholders 
A more detailed explanation has been given of the view of market operators and how these 
views have been taken into account in the di fferent options. Table 7 with the opinions of 
Member States and market operators to the su ggestions under the pref erred option (option 3) 
has been modified accordingly. 
Other recommendations in the Impact Assessme nt Quality Check list that was received 
previously to the IAB meeting ha ve also been taken into account (notably in sections 5.3 and 
6.1)  
 
EN 33   EN On 17 October 2008, the IAB adopted its opinion on the second draft versi on of the IA report. 
The recommendations of the IAB have been consider ed as follows in this final third version: 
1. In relation to the recommendation to stre ngthen the link between the statement "data 
does not establish that the application of the Di rective led to any change in the geographical 
composition of interest-bearing" and the need for immediate action, mention has been made 
of the views of national admi nistrations and operators that  improvements are in any case 
needed (Recommendation 1); 
2. Table 1 with the hierarchy of identified  problems has been supplemented with cross-
references to the different opt ions in section 4. These links will allow a better understanding 
of the relationship between identified probl ems and proposed solutions (Recommendation 1); 
3. The recommendation of the IAB to indicate  the extent to whic h the input received 
from stakeholders has been taken into account does not need further development in the view of the author DG. In fact, the descriptions of option 1 and 2 in section 4 provide the view of 
some of the operators (namely EBF and EFAMA) on the proposed solutions and table 7 in the 
annex describes the position of tax administratio ns and operators on the solutions provided in 
option 3 (the preferred option).The advantag es and disadvantages of option 4 from the 
viewpoint of tax administrations and opera tors are also summarised in section 4 
(Recommendation 2). 
4. Option 3 in section 4 has been improved by describing the possible options (and the 
preferred one) for updating the "pos itive lists"; (Recommendation 2) 
5. In relation to the consequen ces of the insufficient availab ility of data, it has been 
clarified at the end of section 1.3 that there is a need to anticipate de velopments based on the 
input of the stakeholders. The lack of quantitati ve data should not be a deterrent to act. In 
section 6.2 it has been clarified that the expe rt group s on savings taxation will be asked to 
provide data which are useful to examine th e potential future substitution effects between 
comparable products (Recommendation 3).  
6. Concerning the need to further elaborate on budget consequences for MS and 
operators, even if this is impossible to quan tify, a new paragraph has been introduced at the 
end of the description of option 3 in section 4; (Recommendation 3) 
7. Section 6.3 has become the new section 7. (See point D "procedure and presentation")
 
EN 34   EN Annex 
Table 7: Positions of Member States and Mark et operators on amendments proposed in option 3 
Proposal Favourable Non favourable Comments 
Extending the scope of the 2003 
Directive to include securities equivalent to debt claims (with substantial capital protection) 
 Large majority of MS 
Most economic operators 
 1 MS 
The industry of the 
innovative financial products (reluctance) 
 – No special comment from the MS against 
– Economic operators' view is that the extension has to 
be made with total clarity on which financial products will be brought within the scope. It can be acceptable only if the need of paying agents for simple tracking of the secu rities concerned is taken 
into account. The industry specialized in the creation of innovative financial produc ts would have to be 
charged with this tracking of the securities concerned 
to the benefit of downstr eam paying agents, this 
would be possible only for newly issued securities  
 
 
EN 35   EN Proposal Favourable Non favourable Comments 
Extending the scope of the 2003 
Directive to include those life insurance contracts providing for very low biometric risk coverage and investing in debt claims and equivalents funds and securities 
  A majority of MS  
Most economic operators    Some MS 
Insurance operators    – Some MS reserved their pos ition about the best legal 
instrument (Savings Directive or mutual assistance Directive) 
– Many insurance operators w ould prefer cooperation 
under a single instrument for all insurance products, but the Savings Directive doesn't seem the appropriate instrument for this purpose and another 
solution could take time to be found and to be possibly agreed with non-EU  countries, leaving room 
for distortions in competition 
– Tax treatment of these products is not consistent in 
all MS. Different views on whether the exclusion of 
these products at present leads to distortions  
– Practical difficulties to set criteria for low biometric 
risk coverage  
 
EN 36   EN  
Proposal  Favourable Non favourable Comments 
Clarifying the situations where the 
paying agent on receipt mechanism applies (Article 4.2) 
   Large majority of MS (a few 
MS reserved their positions) 
Most operators, however the 
EBF prefers to abolish the mechanism if it is not extended to third countries 
  1 MS 
     – Doubts on the application to  discretionary trusts 
– Most economic operators ask for a positive list of 
entities and arrangements concerned if the measure is to be retained and/or extended 
 
Introducing a look-through 
approach in relation to selected jurisdictions 
     Large majority of Member 
States 
     
2 MS   Most economic 
operators 
  – Some" favourable" MS would even like to apply the 
look-through approach to al l legal persons, entities 
and arrangements, and even resident in any EU MS 
– Economic operators fear that this could erode 
competitive position of EU paying agents. In any case, in favour of a positive list and application limited to entities and legal arrangements established in third countries 
 
 
EN 37   EN Table 8: data availability and shortcomings 
Provider Description Shortcomings 
Bank for 
International Settlement (BIS) – Quarterly data on bilatera l cross-border deposits 
by banks and non-banks for 40 reporting countries. Non-bank depositors include individuals, public institutions and businesses (non-bank financial institutions such as mutual funds, hedge funds and insurance companies).  
– A country breakdown with regard to the country 
of residence of the benefi cial owner is available. 
– From the Q1 2000 to Q4 2007.  
– Geographical scope includes  third countries that 
are known to attract savings such as Switzerland, Cayman Islands, Bermudas, etc. Singapore and Macao and partially Japan did not provide any data 
 – Not all EU-Member States are included. 
– No split between deposits from individuals (covered by the 
Directive) and from co mpanies (not covered). 
– Dataset mainly covers one instrument (deposits) whose share in the 
total savings might be small. 
 
EN 38   EN Provider Description Shortcomings 
EUROSTAT –  National accounts data on aggregated interest 
income split by source country is available. 
– 1995 to 2006 for EU-27 with some gaps – Only for Member States. Available Data stems from the national 
authorities.  
– Definition of interest payments acco rding to the nati onal accounts is 
not identical to the definition of interest payments in the Savings 
Directive. 
– Covers both interest from fore ign (covered by Directive) and 
domestic (not covered) sources. 
 
Member States and 
territories where Directive is applied– Bilateral data on information exchange and tax 
withhold (when applicable).  
– Number of benefi cial owners, residual entities, 
paying agents, and number of records exchanged between countries 
– Available for the seco nd half of 2005 and for 
2006. – Data quality is partly unsatisfying as many data are still missing and 
awaited from Member States.  
– Cannot be used to evaluate th e impact of the Directive on 
investment and tax evas ion since it provides on ly the data that are 
actually exchanged.