EN    EN EN 
 
EN    EN  COMMISSION OF THE E UROPEAN COMMUNITIES 
Brussels, 15.9.2008 
SEC(2008) 2420 
COMMISSION STAFF WORKING DOCUMENT 
presenting an economic evaluation of the effects of Council Dir ective 2003/48/EC on the 
basis of the available data 
  
Accompanying document to the 
 
REPORT FROM THE COMMI SSION TO THE COUNCIL 
 
in accordance with Article 18 of Council Di rective 2003/48/EC on taxation of savings 
income in the form of interest payments 
 
[COM(2008) 552 final] 
 
EN 2   EN COMMISSION STAFF WORKING DOCUMENT  
presenting an economic evaluation of th e effects of Council Di rective 2003/48/EC on 
the basis of the available data  
1 Scope, methodology and constraints  
This annex provides quantitati ve approaches to evaluate the functioning of Council 
Directive 2003/48/EC on taxation of savings income in the form of interest payments 
(the "Directive") for the first report pursuant to  Article 18 of the Directive. It analyses the 
evolution of certain proceeds from investment s that are covered by th e Directive or that 
contain elements falling within its scope. In ad dition, the analysis looks at the effects of 
the implementation of the Directive on some investment patterns. 
However, the analysis suffers from many shor tcomings linked to definitions in the legal 
provisions of the Directive, to severe data limitations and to technical issues, all of which 
make the analysis more difficult. The issues  linked to the legal provisions include the 
facts that the beneficial owner may use in termediate structures not covered by the 
Directive or that the country of the paying ag ent may be different from the country where 
the funds are located.  
Data limitations create a major difficulty for ev aluating the effectivenes s of the Directive. 
Important information such as the amount of  foreign and domestic interest income 
reported by individuals to thei r Tax Administration in their personal income tax returns, 
or the number of beneficiaries who had tax w ithheld to be compared to those who opted 
to disclose information in Member States that apply a withholding tax, have not been 
provided in many cases by Member States. Typically, Member States only report the 
levels of withholding taxes collected or the information exchanged since mid-2005. 
Longer time series, including the period prior to the introduction of the Directive would 
have made it possible to better assess its eff ects. Those long series are only available for 
items that cover a scope larger than that of  the Directive (e.g. total interest payments 
received) or more specific items such as bank deposits (with the drawback that, while the 
Directive only covers interest  payments to individuals, the data do not allow a distinction 
to be made between individual and corporate re cipients). Taken together this leads to the 
problem that there is no ideal benchmark available that exactly covers the items falling within the scope of the Directive. The data analysis presented here will therefore take a 
more descriptive approach and explain the re sults given the available data. Because of 
this incomplete reporting, the Commission is not in a position to be more precise in its analysis. 
Finally, the analysis is also constrained by the difficulty of separating many concomitant 
effects. The Directive is ai med at enabling Member States to tax their resident 
individuals on interest income received in anot her Member State. To the extent that the 
income covered by the Directive previously escaped taxation, there is likely to be an 
effect on the vehicles that fall within its scope: investors might decrease their savings 
because of a lower net-of-tax interest rate; i nvestors might reallocate their savings in the 
same vehicle but in another country (e.g. one  not subject to the Directive); investors 
might reallocate their savings to wards other investment vehicles  as the relative net-of-tax 
return has changed; and/or in vestors might evade taxation.  
 
EN 3   EN These different data limitations must be borne  in mind when interpreting the results of 
the analysis. The remainder of this section is organised as follows: the next sub-section looks at the evolution of intere st payments in general. The third sub-section looks at the 
evolution of bank deposits. Next, the data colle cted from the Member States on exchange 
of information and withholding taxes is anal ysed. The next two sub-sections look at 
UCITS and at the cost borne by paying agents  for adapting their system and applying the 
measures. The sub-section on costs is based on the only significan t result of a broader 
consultation of representative Trade Associ ations on the quantitative impact of the 
Directive that the Commission Services had la unched within the fram ework of the Expert 
group set up in 2007. For more details consult 
http://ec.europa.eu/taxati on_customs/taxation/personal_tax/savings_ta x/savings_directive_review/index_en.htm . 
Finally, the last section offers a statistical analysis of the im pact of the introduction of the 
Directive on savings and on bank deposits. 
2 Descriptive sectoral accounts data  
A first step in the analysis is to use Eurostat's sectoral  accounts data to follow the 
evolution of interest payments vis-à-vis othe r types of savings income and the evolution 
of household recipients vis-à-vis financial and non-financial corpor ate recipients. Two 
caveats shall be made. First, missing data do not allow the calculation of summary time-
series for years before 2000 and for seven Member States. Secondl y, it should be noted 
that the Eurostat figures incl ude many interest payments th at do not fall under the scope 
of the Directive. One noticeable example is domestic interest payments. However, those 
figures may give some indications about the relative importance of interest income in 
comparison to other types of savings income and about the general evolution of income 
from savings. The figures for interest and divi dends are reported in Table (1). No detailed 
statistics are provided by Eurostat on the composition of the remaining part of the 
savings income generated by other ty pes of financial instruments.  
Table (1): Summary figures for various type s of income from savings and recipients 
year (1) 
Gross savings to GDP (2) 
Savings income to 
GDP (3) 
Share of interest 
income in total 
savings income (4) 
Share of dividend 
income in total 
savings income 
2000 20.4% 35.5% 60.6% 29.9% 
2001 20.1% 35.7% 60.2% 31.9% 
2002 19.8% 31.6% 58.1% 33.3% 
2003 19.6% 29.8% 55.4% 35.7% 
2004 20.2% 30.4% 53.2% 36.4% 
2005 19.8% 32.4% 53.0% 37.0% 
2006 20.2% 35.4% 55.7% 35.1% 
 (5) 
Share of interest 
income of Households 
in total interest 
income (6) 
Share of dividend 
income of Households 
in total dividend 
income (7) 
Share of interest 
income in 
Households' total 
savings income (8) 
Share of dividend 
income in 
Households' total 
savings income 
2000 20.0% 52.8% 33.9% 42.6% 
2001 19.6% 51.1% 33.4% 44.0% 
2002 19.4% 51.2% 30.8% 45.1% 
2003 19.7% 51.8% 28.9% 46.7% 
2004 19.4% 51.3% 28.0% 48.2% 
2005 18.1% 49.7% 27.0% 48.9% 
2006 16.9% 48.8% 28.2% 47.8% 
GDP-weighted averages for 20 EU Member States (series in complete or not available for BG, CY, HU, LU, MT, RO, 
SE). Data for EL (2005 and 2006) are set as in 2004. Data for IE (2000 and 2001) are set as for 2002. Data for PL, PT 
and LV (2006) are set as for 2005. Source: Eurostat sectoral data. 
 
EN 4   EN First, columns (1) and (2) of Table (1) show that gross savings1 have been relatively 
stable in percentage of GDP, while  the amount of income from savings2 in percentage of 
GDP has followed a U-curve between 2000 and 2006. A noticeable element from columns (3) and (4) is the steady decrease of th e share of interest income in total income 
from savings between 2000 and 2005, matched by an increase in the share of dividends. 
This situation might be explained by relatively low interest rates, causing interest-bearing instruments to be less attractive. 
Second, columns (5) and (6) show  that the share of househol d recipients in both total 
interest payments received and total dividends  received is relatively stable between 2000 
and 2004 and drops in 2005 and 2006. A more detail ed analysis shows that this drop is 
due to an increase in payments  received by financial corporations. Figure (1) illustrates 
this for interest payments. 
Figure (1): Total interest payments received 
020000040000060000080000010000001200000140000016000001800000
2000 2001 2002 2003 2004 2005 2006Millions EUR
Non-financial corporations Financial corporations Households 
20 EU Member States (series incomplete  or not available for BG, CY, HU, LU, MT, RO, SE). Data for GR (2005 and 
2006) are set as in 2004. Data for IE (2000 and 2001) are set as for 2002. Data for PL, PT and LV (2006) are set as 
for 2005. Source: Eurostat sectoral data. 
Finally, columns (7) and (8) display the share of interest and of di vidends in households' 
total income from savings. The figures show that there has been a gradual shift from 
interest toward dividend revenue between 2000 and 20043. Nevertheless a significant 
share of savings income is still made of interest income. This evolution is shown in figure (2). 
                                                
 
1 Category B8G of the sectoral accounts. A finer distinction between savings from households and 
from corporations is not feasible because of poor data availability 
2 Category d4 of the sectoral accounts. This category represents 'property income', which is 
arguably larger than savings income and includes interest (d41), distributed income of 
corporations (d42), reinvested earnings on direct foreign investment (d43), property income attributed to insurance policy holders (d44), and rents (d45).  
3 The remaining categories are property income attributed to insurance policy holders (d44) and 
rents (d45). Both are stable at respectively about 23% and 1% of the total revenues from savings. The category reinvested earnings (d43 ) is zero for households recipients. 
 
EN 5   EN Figure (2): Composition of income  from savings for households 
0%10%20%30%40%50%60%70%80%90%100%
2000 2001 2002 2003 2004 2005 2006Interest Dividends Reinvested earnings Insurance Policy Rents 
GDP-weighted averages for 20 EU Member States (series in complete or not available for BG, CY, HU, LU, MT, RO, 
SE). Data for GR (2005 and 2006) are set as in 2004. Data for IE (2000 and 2001) are set as for 2002. Data for PL, 
PT and LV (2006) are set as for 2005.  Source: Eurostat sectoral data. 
In conclusion, the introduction of the Direct ive does not appear to have led to major 
changes in the composition of savings incomes. 
3 Evolution of internat ional deposits (BIS data)  
3.1 The BIS bilateral data on international deposits 
This section investigates the possible effect of the Directive on inte rnational depositing. 
To this end, bilateral  data from the Bank for Internat ional Settlements (BIS) on deposits 
from foreign bank and foreign non-bank depos itors are used. Non-Ba nk depositors are all 
depositors which are either individuals or companies excluding banks. Deposits held by 
this group are called "non-bank deposits" in th e following analysis. If the depositor is a 
bank the name of the deposit is accordingly "b ank deposits". The quarterly data cover the 
period Q1-2000 to Q4-2007. The data con cern deposits in all currencies and are 
expressed in (million of) USD. To measure the effects it is also necessary to take into 
account the agreements concluded with five  European third countries on equivalent 
measures to the Directive and with ten depe ndent and associated te rritories of the EU 
Member States on the same measures.  
As a first step, data for BIS reporting countri es referring to payments made cross-border 
to depositors in a EU Member State has been se lected. It should be noted that not all EU 
Member States report to the BIS and that, therefore, the coverage is incomplete.  
Next, the data for the BIS reporting countries  where the deposits are located have been 
divided into three categories:  
(a) EU Member States and third countries or jurisdictions that appl y a withholding tax to 
interest paid to individuals who are residents of a Member State. This category includes 
Austria (AT), Belgium (BE), Luxemburg (LU), as well as Guernsey (GG), Jersey (JE), 
Isle of Man (IM) and Switzerland (CH).  
(b) EU Member States that exchange info rmation under the Directive. This category 
includes: Germany (DE), Spain (ES), Finland (FI), France (FR), Ireland (IE), Italy (IT), 
the Netherlands (NL), Portugal (PT), Swed en (SE) and the United Kingdom (UK).  
 
EN 6   EN (c) Finally, other jurisdictions  that do not apply the Direct ive. This category includes: 
Australia (AU), Canada (CA), India (IN), Japa n (JP), Turkey (TR), Taiwan (TW) and the 
United States (US).  
Because of substantial gaps in the informa tion for the whole period, the observations for 
Bermuda, Brazil, Chile, Denmark, Greece, Mexico  and Panama, have not been taken into 
account in the summary statistics , as they would dist ort the picture across  years. Finally, 
Singapore (SG) and Macao (MO) ha ve not agreed to disclose their bilateral data for the 
purpose of this study. 
3.2 Data limitations 
There are several problems  inherent in the data. Firstly , two statistical breaks in reporting 
have a large impact on the totals. This is especially the case for the 1st quarter of 2003 
and for the 2nd quarter of 2006 for which large stru ctural breaks appear for deposits by 
UK residents in the US. This break increases the share of non-bank deposits in the US substantially which in tu rn leads to a strong increase in the share of third countries which 
do not apply the Directive. Secondly , all currencies are expressed in USD. Exchange 
rates with the USD have been volatile througho ut the period and th is may affect some 
data. Thirdly , non-bank deposit data include both i ndividual depositors (subject to the 
Directive) and corporate deposito rs (not subject to the Direc tive). There is no information 
on the exact split between  the two types of depositor. One indication is that , as reported 
in a previous section, the tota l amount of interest income re ceived by households in the 
total amount of interest income received by all private recipien ts was 16.9% in 2006. 
This share may vary across countries and year s and there is no proper way to deal with 
this problem in the context of this analysis. 
3.3 Analysis 
At the end of 2007, external non-bank depos its amounted to USD 627.6 billion for the 
countries applying a withholding tax (cate gory (a) above); to USD 1,203.8 billion for 
Member States applying information exch ange (category (b) above); and to USD 
538.415 billion for third countri es (category (c) above). 
First, the quarterly growth rate of non-ba nk deposits for all three categories has been 
computed and is illustrated in figure (3) . Because of the structural breaks, data for Q1-
2003 and Q2-2006 for third countries (category (c)) are not included
4. A visual analysis 
of figure (3)  does not allow detection of a common pattern for the growth of non-bank 
deposits in the countries covered by the sa vings taxation measures (categories (a) and 
(b)) compared to the third countries (category (c)).5 A difference between third countries 
(category (c)) and countries that  applied the Directive (categor ies (a) and (b)) is that the 
volatility of growth ra tes is much larger for the former  until 2004. After that point in time 
the development is similar. This holds also  for the years after the introduction of the 
Directive. 
                                                 
4 There are two major statistical breaks in the firs t quarter of 2003 and the second quarter of 2006. 
Those statistical breaks inflate the share of thir d countries at the expense of other categories. 
5 Controlling for the exchange rate does not change the conclusions. 
 
EN 7   EN Figure (3): Quarterly growth of non-bank deposits  
Growth rate of external non-bank deposits vis-à-vis directive countries in USD
-20%-10%0%10%20%30%40%
2341234123412341234123412341234
2000 2000 2000 2001 2001 2001 2001 2002 2002 2002 2002 2003 2003 2003 2003 2004 2004 2004 2004 2005 2005 2005 2005 2006 2006 2006 2006 2007 2007 2007 2007% per year
WT countries Xinfo countries Third countries 
Source: BIS and own calculations 
Next, for each category ((a), (b) and (c) above ) of BIS reporting countries, the evolution 
of the share in the total exte rnal non-bank deposits made by residents in countries in 
category (a) and (b) has been studied. 6 Notwithstanding the two structural breaks 
mentioned above7, figure (4) shows that the share of deposits in banks in BIS reporting 
countries that apply the wit hholding tax (category (a)) has decreased from 35.0% to 
29.3% between mid-2003 and mid-2005 but has been  stable after the introduction of the 
directive. This was mainly to the benefit of  third countries (category (c)). The respective 
shares of each category of BIS reporting coun tries have been relatively constant since 
mid-2005. The same pattern emerges if the de posits are converted fr om US-Dollars to 
Euro. This is done in order to control for po ssible distortions due to  the reporting in US-
Dollars only and the volatility of Dollar-Euro exchange rate. The only major difference in this case is that the shar e of third countries is larger. However, the general trend does 
not change. 
                                                
 
6 i.e. the 13 EU Member Stat es that report to the BIS. 
7 Therefore, the shares fro m the fourth quarter of 2002 cannot be directly compared with the shares 
of the second quarter of 2003, and the shares of the first and third quarters of 2003 cannot be directly compared either. 
 
EN 8   EN Figure (4): Share of BIS reporting countries by category in non-bank deposits  
Share of bank countries in non-bank deposits
0%10%20%30%40%50%60%70%80%90%100%
123412341234123412341234
2002 2002 2002 2002 2003 2003 2003 2003 2004 2004 2004 2004 2005 2005 2005 2005 2006 2006 2006 2006 2007 2007 2007 2007%
WT countries Xinfo countries Third countries 
Source: BIS and own calculations 
Finally, we can compare the previous data w ith the share of external deposits from bank 
depositors. This is done in fi gure (5). We see that the lion's share (about 70%) is for 
countries that apply information exchange a nd that the shares are stable over time. The 
large share of countries exchanging informa tion (category (b)) reflects the fact that 
countries that host large fina ncial sectors (such as the UK and Germany) belong to this 
group. As regards the share of non-bank deposit s two observations can  be made. First, 
from a static point-of-view the share of external non-bank deposits in count ries applying 
the withholding tax and in third countries (cat egories (a) and (c)) is about 35% of total 
external deposits, while this proportion is  20% in countries applying exchange of 
information (category (b)). Secondly, from a dynamic point of view, while the share of 
deposits made by external banks has not changed, there has been a slight decrease in the share of non-bank deposits in countries exchanging information (category (b)). These two elements could suggest that non-bank depo sitors have a preference for countries 
maintaining some form of bank secrecy.  
 
EN 9   EN Figure (5): Share of BIS reporting countries in bank deposits  
Share of bank countries in bank deposits
0%10%20%30%40%50%60%70%80%90%100%
123412341234123412341234
2002 2002 2002 2002 2003 2003 2003 2003 2004 2004 2004 2004 2005 2005 2005 2005 2006 2006 2006 2006 2007 2007 2007 2007%
WT countries Xinfo countries Third countries 
Source: BIS and own calculations 
In conclusion, for deposits of non-bank depositors, there has been an observable 
shift from countries within  the scope of the Directive  towards third countries. 
However, this development took place before the Directive came into force. 
4 Evolution of information exchange and w ithholding taxes using data from Member 
States and from other jurisdictions  covered by the savings agreements  
4.1 Description of the data 
The EU Member States and other jurisdicti ons covered by the savi ngs taxation measures 
deliver data on the tax reve nue received from or paid to other countries (if the 
withholding tax is applied) and on the in formation shared (number of individuals, 
country of residence, total income subject to ex change etc.). This data  is available for the 
second half of 2005 and for 2006. UK is in a spec ial position because its tax year ends on 
6 April, so its data refers to the peri od between 1 July 2005 and 5 April 2006. The data 
only contains the revenue covered by (and repo rted under) the Directive. Hence, the data 
does not give information about the evolution of non-covered items or on the structure of 
savings after the implementation of the directiv e. The reason is that the data provided by 
the tax authorities of the partic ipating countries lists only sa vings income that has indeed 
been disclosed or taxed while  all types of tax evasion or  other reactions to taxation 
cannot be observed. 
The data contains information on:  
• The amount of withholding tax collected by countries applying such a tax, split by 
country of recipient of the tax payment (but no information about the number of 
beneficial owners concerned). 
• The amount of interest payments and sales proceeds sent (bilateral data), if possible 
with a breakdown between interest paymen ts and sales proceeds, as well as a 
breakdown between beneficial ow ners and residual entities. 
 
EN 10   EN • The amount of interest payments or sale s proceeds by type (debt claims, interest 
accrued or capitalised coming from sales of de bt claims or undertakings, interest from 
undertakings, annualised interest). 
• The number of beneficial owners on a bilate ral basis, the number of residual entities 
on a bilateral basis, the number of pa ying agents, and the number of records 
exchanged between countries. 
4.2 Data Limitations 
Before discussing the figures below it has to be noted that the da ta provided by Member 
States and other jurisdictions covered by the savings taxation measures contain a critical 
number of missing values. This leads to the problem that the data must be interpreted 
with caution since missing values significan tly reduce the number of observations for 
certain jurisdictions. The missing value problem  is especially critical for the data on 
information exchange discussed in secti on 4.3. This leads to the problem that a 
separation of different items covered by the Directive is not possible. For example the 
data does not permit a solid statement on the ro le of paying agents vs. residual entities on 
receipt. 
Furthermore, there is a total lack of info rmation on beneficial owners in Austria and 
Belgium. The same is true for most third c ountries. An exception is Luxemburg which at 
least reports the number of beneficial owne rs who opted for voluntary disclosure. While 
some countries reported on most items that fall under the scope of the Directive and the 
respective agreements there are many countri es where no values are reported or where 
the figures for the second half of 2005 and the year 2006 differ so strongly that different 
reporting methods must have been applied. This  can also be illustra ted by the differences 
in reported values between countries. If all countries had used the same definitions and exchange rates, the numbers reported by th e sending country should  be equal to the 
numbers reported by the country that received the information or the tax revenue. This is 
however not the case for each bilateral position. In the second semester of 2005 the total discrepancies between sent and received va lues amounted to 0.9 million Euro. In 2006 
this value was still above 0.5 million Euro. Taken together, these problems reduce the quality and the reliability of the data. The fo llowing descriptive explanations have to be 
read in the light of this. Furthermore, onl y the revenue effects can be observed since 
there is no, or only a very weak, link to the inve stment decisions that led to this outcome.  
4.3 Descriptive data analysis 
The main aim of the Directive is to enable Me mber States to tax interest income received 
by their resident individuals  from other Member States through an exchange of 
information. During a transitional period some  of the Member States levy a withholding 
tax instead of exchanging information. The re venue from this tax is shared with the 
Member State of residence of the bene ficial owner of the interest income. 
The agreements with the third countries and the other jurisdictions build on either of 
these two methods but in most cases they are unilateral in the sense that information is 
given to Member States (Anguilla and Cayman  Islands) or the withholding tax levied 
shared with Member States (Andorra, Liech tenstein, Monaco, San Marino, Switzerland, 
and Turks & Caicos Islands). Only Montserr at and Aruba (which apply reporting) and 
Jersey, Guernsey, Isle of Man, British Virgin  Islands and the Netherlands Antilles (which 
 
EN 11   EN levy a withholding tax) in their turn receive, from Member States, information or a share 
of the withholding tax levied.  
Accordingly, countries can be divided into  two groups: Firstly, countries that provide 
information, secondly, countries that levy a withholding tax and shar e the revenue with 
the country where the beneficial owner resides.  In the following section available data on 
interest payments and sales proceeds reported or the amount of withholding tax shared is 
briefly described. 
4.3.1 Countries operating information exchange system 
The first group of countries is exchanging info rmation as provided in Articles 8 and 9 of 
the Directive or under th e respective Agreement. Table (2)  shows the countries that apply 
an information exchange regime and the su m of reported interest payments and sales 
proceeds according to Article 9 of the Direct ive or under the respective Agreement. As 
expected, the largest economies hosting a large part of economic activities and financial centres report the highest values. The UK re ported EUR 9.1 b for interest payments made 
from 1 July 2005 to 5 April 2006 (end tax yea r). In 2006, Germany sent information on 
interest payments amounting to almost 1.4 b Euro to other participating countries. A 
similar value can be found in France (1.5 b Eu ro). Data on information sent in 2006 is 
not available for Cyprus, Spain, Hungary, Italy, Sweden, Anguilla and Montserrat. 
Table (2): Interest payments and sales proceeds reported by countries using 
information exchange* 
EU Member States 2nd half 2005 2006 
Cyprus n.a. n.a. 
Czech Republic n.a. 17.81 
Germany 660.73 1392.06 Denmark n.a. 1.16 Estonia n.a. 4.40 Spain n.a. n.a. Finland n.a. 7.19 
France 568.14 1512.54 
Greece 6.85 23.11 Hungary n.a. n.a. Ireland 258.87 770.72 Italy n.a. n.a. Lithuania n.a. 0.09 
Latvia 0.18 0.65 
Malta 1.02 2.10 Netherlands n.a. 795.69 Poland 0.07 0.61 Portugal n.a. 0.56 Sweden n.a. n.a. 
Slovenia n.a. 1.35 
Slovakia 1.87 4.76 United Kingdom 9132.49 n.a. Dependent and Associated Territories   
Anguilla n.a. n.a. Aruba 0.01 0.09 Cayman Islands 8.81 18.02 
Montserrat n.a. n.a. 
in million Euro 
*Amount of interest payments and sales proceeds under Art. 9 subject to exchange of 
information/ voluntary disclosure, (B eneficial owners and residual entities) 
 
EN 12   EN Table (3) shows the average payment reported  in Table (2) divided by the number of 
beneficial owners that have been reported. All values are in Euro. Again there are many 
countries missing, nevertheless, the values give  a first indication of the average size of 
payments. The largest payments per beneficial owner can be found in Germany and France.
8  
Table (3): Reported average payments per beneficial owner 
EU Member States 2nd half 2005 2006 
Austria  n.a. n.a. 
Belgium  n.a. n.a. 
Cyprus  n.a. n.a. 
Czech Republic  n.a. 174 
Germany  3,232 6,559 
Denmark  n.a. n.a. 
Estonia  n.a. 761 
Spain n.a. n.a. 
Finland  n.a. 595 
France  4,706 6,375 
Greece  341 827 
Hungary n.a. n.a. Ireland 3,495 5,677 Italy n.a. n.a. Lithuania n.a. 123 Latvia 102 102 
Malta 117 226 
Netherlands n.a. n.a. Poland 5 44 Portugal n.a. 204 Sweden n.a. n.a. Slovenia n.a. 191 
Slovakia 179 392 
United Kingdom n.a. n.a. 
 in Euro 
 
                                                 
8 Information on reported payments per beneficial owner is also available for Luxemburg. Unlike 
Austria and Belgium, Luxembourg delivers information if beneficial owners opt for voluntary 
disclosure as described in Article 13 of the Directive in order not to be subject to a withholding tax. The average payment in 2006 is 10,373 Euro according to this source.  
 
EN 13   EN 4.3.2 Countries levying a withholding tax  
Table (4): Tax revenue shared by countries with withholding tax regime 
EU Member States  2nd half 2005 2006 
Austria  9.48 44.32 
Belgium  7.51 25.92 
Luxembourg  35.90 124.59 Third Countries    
Andorra  3.50 12.77 Liechtenstein  1.94 7.08 Monaco  3.75 11.70 
San Marino  1.13 7.47 
Switzerland  77.23 255.92 Dependent and Associated Territories   British Virgin Islands  0.00 n.a. Turks and Caicos  0.01 0.02 Guernsey  4.93 16.83 
Jersey  13.26 32.15 
Isle of Man  13.26 20.35 
Netherlands Antilles  n.a. n.a. 
in million Euro 
 
Table (4) displays available information, for the countries levying a withholding tax, 
about the amount of revenue sh ared with the Member States . The major part of revenue 
from the withholding tax in the second half of 2005 and in 2006 was raised in 
Switzerland and Luxembourg. For both those periods, Switzerland accounted for more 
than 45% of the total amounts reported as re gards withholding tax shared; Luxembourg's 
share was 22%. Austria and Belgium account ed for 7.4% and 4.6%, respectively, while 
Jersey, the Isle of Man and Guernsey contributed 6.2%, 4.6%, and 3.0%. All other 
countries have very low shares. There is no information from the Netherlands Antilles 
about the amount of withholding tax shared. For the British Vi rgin Islands information is 
missing for the second half of 2005. 
Figure (6) shows the distribution of revenue  from the withholding tax levied in the 
second half of 2005 and in 2006. The graph only takes into account countries which 
received more than EUR 10 million in both years together. Unsurprisingly, the largest countries in the EU received the largest shares. Germany (de) received EUR 192.7 million in 2005 and 2006, Italy (it) EUR 112.9 million followed by France (fr) and the United Kingdom (uk). A notable  exception is Belgium (be) which received more than 
EUR 71 million. This is due to the close ties between Belgium and Luxemburg. The 
revenue received from Luxemburg accounts for 74% of the Belgian part of the revenue. 
 
EN 14   EN Figure (6): Withholding tax collection  
71.6
192.7
48.8 62.813.7112.922.6105.2
be de
es fr
gr it
nl uk
Source: European Commission2005 and 2006 in m Euro Received Withholding Tax Revenue
 
In conclusion, the data on information ex change from EU Member States and other 
jurisdictions show that reported interest payments increased significantly between 
the second half of 2005 and 2006. Unsurprising ly, the largest payments can be found 
in the largest economies. The quality of da ta reporting by Member States to the 
Commission needs to be improved. 
The data on withholding tax countries shows that Switzerland and Luxemburg are 
the main sources of withholding tax rev enue while Germany, Italy and the UK 
receive the largest share of tax revenue. 
5 UCITS data  
Interest payments distributed by Undertakings  for Collective Investment in transferable 
securities (UCITS) are generally included in the scope of the Directive. If the UCITS 
invests only marginally in debt claims (l ess than 15%), it will fall outside the scope 
provided that  the Member State where the UCITS is established has exercised the option 
of excluding such UCITS. N on-UCITS with legal personality  do not fall under the scope 
of the Directive at all. Non- UCITS lacking legal personality  can opt to be treated as 
UCITS, and in such case they would fall w ithin the scope. This varying treatment of 
UCITS and Non-UCITS under the Directive makes them particularly important to study.  
Table (5) shows the evolution of UCITS a nd non-UCITS as well as some of their 
respective subcategories for 2002 to 2007. The in teresting feature is that the share of 
UCITS and non-UCITS in the to tal has remained constant at 78% and 22% respectively. 
The only noticeable evolution is  a gradual decrease of the share of UCITS investing in 
bonds from 29% to 19.5% between 2002 and 2007, mostly to the benefit of those 
investing in equity. This shift has however occurred throughout the period and a possible 
impact of the Directive is  therefore questionable. 
 
EN 15   EN Table (5): Evolution of UCITS and non-UCITS 
Source: EFAMA Quarterly Statistical Releases. * Irel and gives no breakdown. Figures are in Billion of 
Euros. 
In conclusion, data do not display a different pattern for UCITS and Non-UCITS 
instruments. The only noticeable evolutio n is a gradual decrease of the share of 
UCITS investing in bonds between 2002 a nd 2007, mostly to the benefit of those 
investing in equity. 
6 Information on costs  
The consultation with Trade Associations represented in  the Expert group on the 
quantitative aspects of the Direc tive led to very little data (the results of this consultation 
are available at: 
http://ec.europa.eu/taxati on_customs/taxation/personal_tax/savings_ta x/savings_directive_review/index_en.htm ). 
The European Banking Federation shared the re sults of a survey indicating that, based on 
reports from 40 paying agents in 6 countri es, the average cost of introducing the 
application of the Directive are EUR 2 milli on per business unit and the recurring costs 
are EUR 100,000 per business unit.  
7 Technical analysis  
This section seeks to estimate the possible effect of the introduction of the Directive on 
variables such as the level of interest received by households  and on the share of interest 
in the total property income of households. Again, many caveats need to be made. First, 
the category of interest covere d by the data is larger than  that covered by the Directive 
and it is not known which percentage of the da ta actually concerns payments subject to 
the Directive. Secondly, cha nges in explanatory variables will influence different types 
of interest payments in different ways. Fo r example, domestic inflation will have a 
different impact on domestic-source interest  received than on fore ign-source interest. 
Thirdly, data on interest received by individuals  are only available for some EU countries 
and for 1995-2006. This means that the effects can  only been seen for the last year or 
two. Fourthly, the effects of introduction of the Directive can only be captured by 
introducing a binary explanator y variable that takes the va lue one in the country-year Billion EUR 31/12/2002 31/12/2003 31/12/2004 31/12/2005 31/12/2006 31/12/2007 
Total UCITS  3,289 3,705 4,189 5,170 5,974 6,203 
Among which       
Equity 971 1,163 1,345 1,822 2,222 2,227 
Balanced 433 470 517 636 800 856 
Bond 955 1,034 1,045 1,190 1,251 1,208 
Money Market 615 668 798 842 841 911 
Other 77 84 139 217 277 355 
Ireland* 239 286 344 463 583 645 
       
Total Non-UCITS 953 1,054 1,156 1,396 1,600 1,723 
Among which       
German Spezialfunds 480 518 543 618 670 691 
Closed-ended British 
Investment Trusts 74 82 86 99 105 83 
Open-ended French 
employees saving 48 57 57 67 85 85 
Luxembourg "other" funds n.a. n.a. 28 66 93 102 
Property funds 118 136 150 167 188 199 
 
EN 16   EN pairs for which the Directive is in force. Because there are only one or two years for 
which this variable applies and because the geographical coverage of this variable does 
not vary, the variable may also simply act as  a fixed effect for a group of countries during 
the last year of observations, picking up so me unobserved effects that are common to EU 
Member States during this year. 
Table (6) shows the results of the regressions for the effect of the Directive on interest 
received by households9. Regressions (1) to (3), show th at the estimated effect of the 
introduction of the Directive is heavily depe ndent on the specificati on of the model. In 
particular, simply changing the proxy for th e size of the country from the level of 
population to the level of GDP turns the effect  of the Directive on the level of interest 
received by households from a positive and significant effect into a negative but non-
significant one. It also turns out that the result s are very sensitive to the inclusion of some 
controls. For example, omitting inflation in the regressions washes out the significance of the Directive variable in all regressions. Th is, combined with the wrong sign for some 
controls place doubts on the statistical signi ficance of the result that introducing the 
Directive decreased the share of interest  in the property income of households.  
Before explaining in detail the single regression s, it should be stated that the econometric 
analysis does not detect any major effect of the Directive on the dependent variables 
explained above. The share of interest rece ived by households in the total interest 
received by individual and corporate recipients has decreased  but this is mainly due to an 
increase in financial corporati ons' receipts. Equally, the share of interest in total property 
income received by households has declined in favour of dividends but this phenomenon 
started already in 2000. A regressi on analysis of the effect of the Directive on the level 
and the share of interest rece ived by households shows some  negative effects but those 
are not statistically robust. 
Regressions (1) to (3) use the logarithm of th e amount of interest received as dependent 
variable, while regressions (4) to (6) use the sh are of interest in the total property income 
received by households instead. The regressions include some control variables. The size 
of the country is supposed to have a positive effect on the amount of interest received by 
its households. This size is proxied by the logar ithm of the population in regression (1) 
and (4). As an alternative, the logarithm of nominal GDP is used in the other four 
regressions. Next, inflation is expected to have an ambiguous effect on the amount of 
interest received by individuals. On the one hand, inflation increases the amount of any 
payment over time. On the other hand, interest  payments are usually fixed and therefore 
investors may decide to shift to other invest ment vehicles. GDP growth is expected to 
have a negative effect on interest receive d because investors may prefer to choose 
investment vehicles which will include better returns such as stocks. Finally, the interest 
rate on deposits is used  as a proxy for the interest rate. It  is expected to  have a positive 
effect on the level of interest received. It s effect on the share of interest is more 
ambiguous because the return on other invest ment types may follow the same pattern. 
Finally, all regressions incl ude year dummies to contro l for unobserved year-specific 
effects that are common to all countries in the sample and all regressions except (3) and 
(6) include country dummies to  control for unobserved countr y-specific that are common 
for all years. 
                                                
 
9 category "d4s14_s15 received"  of the Sectoral Accounts 
 
EN 17   EN Table (6): Effect of the Directive on Interest received by Households 
Source. Eurostat, Sectoral Accounts. Robust t-statistics in parentheses. * significant at 5%; ** significant 
at 1%. The significance level indicates the level of Type-I or "false positi ve", that is the percentage chance 
that the coefficient is shown as different from zero, while it is in reality zero. 
In conclusion, regression anal ysis does not show a statis tically significant and robust 
effect of the Savings Directive on the leve l and the share of interest in the total 
property income received by households. 
Data Description Source 
External loans and debt Bilateral external loans and debts 
of the banking sector in 40 BIS 
members BIS (restricted basis) 
Inbound and outbound interest 
and dividends For the EU-27, the amount of 
inbound and outbound interest 
and dividend payments for individuals and corporations Eurostat Sectoral Account 
Statistics 
Amount of withholding tax, split by country of residence of the 
beneficial owners For all Member States, 
Dependent and Associated 
Territories and Third Countries having opted for the withholding 
tax mechanism, total amount of 
tax revenue shared from the withholding tax, split by MS of 
residence of the beneficial 
owners Member States 
Amount of withholding tax levied 
under article 11(5) of the 
Directive, split by country or 
Territory of establishment of residual entities This item concerns Austria, 
Belgium and Luxemburg as well 
as the following Dependent and 
Associated Territories: Guernsey, Jersey, Isle of Man, Turks and 
Caicos, British Virgin Islands and 
the Netherlands Antilles. Member States 
Amount of interest payments and For all Member States, Member States Variables 
 (1) 
Log interest (2) 
Log interest (3) 
Log interest (4) 
Share interest (5) 
Share interest (6) 
Share interest 
Directive  .347 
(2.67)** -.160 
(.99) -.095 
(.45) -.253 
(3.98)** -.220 
(3.96)** -.113 
(1.33) 
Log population  -13.459 
(5.96)**   1.104 
(1.10)   
Inflation -.005 
(0.85) -.009 
(1.52) -.015 
(1.82) -.003 
(1.59) -.002 
(1.18) -.003 
(0.84) 
Deposit interest 
rate .046 
(4.97)** .048 
(5.60)** .040 
(4.19)** -.002 
(1.29) -.002 
(1.07) .008 
(2.61)** 
Real GDP growth -.023 
(0.85) -.030 
(1.43) -.020 
(0.84) -.014 
(2.21)* -.015 
(2.30)* -.014 
(1.68) 
Log nominal GDP  2.019 
(7.37)** 1.323 
(37.25)**  -.033 
(0.30) -.003 
(0.23) 
Constant 194.249 
(6.07)** -18.804 
(4.62)** -8.025 
(15.33)** -19.689 
(1.08) .920 
(0.94) .550 
(2.61)* 
       
Time dummies Y Y Y Y Y Y 
Country dummies Y Y N Y Y N        
Observations 188 188 188 177 177 177 
R-squared 0.99 0.99 0.95 0.90 0.89 0.20 
 
EN 18   EN Data Description Source 
sales proceeds subject to 
exchange of information / 
voluntary disclosure, split by 
country of residence of the beneficial owners including 
residual entities Dependent and Associated 
Territories and Third Countries, 
amount of interest payments and 
sales proceeds, split by country of residence of the beneficial owner 
and establishment of the residual 
entities 
Amount of interest payments subject to exchange of 
information / voluntary disclosure 
under Art. 9, split by country of 
residence of the beneficial owner For all Member States, 
Dependent and Associated 
Territories and Third Countries, 
amount of interest payments 
(excluding sales proceeds) split 
by country of residence of the beneficial owner - Art. 9 Member States 
Amount of sale proceeds subject 
to exchange of information / 
voluntary disclosure under Art. 9, split by country of residence of 
the beneficial owners For all Member States, 
Dependent and Associated 
Territories and Third Countries, amount of sales proceeds 
(excluding interest payments), 
split by country of residence of the beneficial owner - Art. 9 Member States 
Amount of interest payments 
subject to exchange of 
information / voluntary disclosure, split by country of 
establishment of residual entities 
- Art. 4.2 For all Member States, 
Dependent and Associated 
Territories and Third Countries, amount of interest payments 
(excluding sales proceeds), split 
by country of establishment of residual entities - Art. 4.2 Member States 
Amount of sales proceeds subject 
to exchange of information / 
voluntary disclosure under Art. 
4.2, split by country of 
establishment of residual entities For all Member States, 
Dependent and Associated 
Territories and Third Countries, 
amount of sales proceeds 
(excluding interest payments), split by country of establishment 
of residual entities - Art. 4.2 Member States 
Amount of interest or sales 
proceeds subject to exchange of information / voluntary 
disclosure, split by the categories 
of Art. 8.2 of Directive 2003/48/EC For MS exchanging information, 
amount of interest payments or sales proceeds subject to 
exchange of information split by 
the categories of art. 8.2 of Directive 2003/48/EC Member States 
UCITS Level of UCITS and non-UCITS EFAMA 
Deposit rate Deposit interest rates for EU and 
BIS countries IMF International Financial 
Statistics 
Nominal GDP Nominal GDP Ameco 
Real GDP growth Real GDP growth Eurostat 
Population Number of inhabitants Eurostat, CIA Factbook, 
NationMaster.com 
Inflation Deflator of GDP Computed from nominal and real 
GDP growth