Council Directive 2003/48/EC of 3 June 2003 on taxation of savings income in the form of interest payments
Date: 2003-06-03
Institutions: Council of the European Union
Subjects: deduction at source, double taxation, interest, legal domicile, tax on investment income, tax system

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COUNCIL DIRECTIVE 2003/48/EC

of 3 June 2003

on taxation of savings income in the form of interest payments

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Commu-
nity, and in particular Article 94 thereof,

Having regard to the proposal from the Commission (1),

Having regard to the opinion of the European Parliament (2),

Having regard to the opinion of the European Economic and
Social Committee (3),

(8)

(9)

Whereas:

(1)

(2)

(3)

(4)

(5)

(6)

(7)

Articles 56 to 60 of the Treaty guarantee the free move-
ment of capital.

(10)

Savings income in the form of interest payments from
debt claims constitutes taxable income for residents of
all Member States.

By virtue of Article 58(1) of the Treaty Member States
have the right to apply the relevant provisions of their
tax law which distinguish between taxpayers who are
not in the same situation with regard to their place of
residence or with regard to the place where their capital
is invested, and to take all requisite measures to prevent
infringements of national law and regulations, in parti-
cular in the field of taxation.

In accordance with Article 58(3) of the Treaty, the provi-
sions of Member States' tax law designed to counter
abuse or fraud should not constitute a means of arbitrary
discrimination or a disguised restriction on the free
movement of capital and payments as established by
Article 56 of the Treaty.

In the absence of any coordination of national
tax
systems for taxation of savings income in the form of
interest payments, particularly as far as the treatment of
interest received by non-residents is concerned, residents
of Member States are currently often able to avoid any
form of taxation in their Member State of residence on
interest they receive in another Member State.

This situation is creating distortions in the capital move-
ments between Member States, which are incompatible
with the internal market.

This Directive builds on the consensus reached at the
Santa Maria da Feira European Council of 19 and 20
June 2000 and the subsequent Ecofin Council meetings
of 26 and 27 November 2000, 13 December 2001 and
21 January 2003.

(11)

(12)

(13)

(14)

The ultimate aim of this Directive is to enable savings
income in the form of interest payments made in one
Member State to beneficial owners who are individuals
resident in another Member State to be made subject to
effective taxation in accordance with the laws of the
latter Member State.

interest payments made or

this Directive can best be achieved by
The aim of
targeting
secured by
economic operators established in the Member States to
or for the benefit of beneficial owners who are indivi-
duals resident in another Member State.

Since the objective of this Directive cannot be suffi-
ciently achieved by the Member States, because of the
lack of any coordination of national systems for the
taxation of savings income, and can therefore be better
achieved at Community level,
the Community may
adopt measures in accordance with the principle of
In
subsidiarity as set out in Article 5 of the Treaty.
accordance with the principle of proportionality, as set
out in that Article, this Directive confines itself to the
minimum required in order to achieve those objectives
and does not go beyond what
is necessary for that
purpose.

The paying agent is the economic operator who pays
interest to or secures the payment of interest for the
immediate benefit of the beneficial owner.

interest payment and the
In defining the notion of
paying agent mechanism, reference should be made,
where appropriate, to Council Directive 85/611/EEC of
20 December 1985 on the coordination of laws, regula-
tions and administrative provisions relating to undertak-
ings for collective investment in transferable securities
(UCITS) (4).

The scope of this Directive should be limited to taxation
of savings income in the form of interest payments on
debt claims, to the exclusion,
inter alia, of the issues
relating to the taxation of pension and insurance bene-
fits.

The ultimate aim of bringing about effective taxation of
interest payments in the beneficial owner's Member State
of residence for tax purposes can be achieved through
the
interest
payments between Member States.

information concerning

exchange of

(1) OJ C 270 E, 25.9.2001, p. 259.
(2) OJ C 47 E, 27.2.2003, p. 553.
(3) OJ C 48, 21.2.2002, p. 55.

(4) OJ L 375, 31.12.1985, p. 3. Directive as last amended by Directive
2001/108/EC of the European Parliament and of the Council (OJ L
41, 13.2.2002, p. 35).

(15)

(16)

(17)

(18)

(19)

(20)

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Council Directive 77/799/EEC of 19 December 1977
concerning mutual assistance by the competent authori-
ties of the Member States in the field of direct and
indirect taxation (1) already provides a basis for Member
States to exchange information for tax purposes on the
income covered by this Directive. It should continue to
apply to such exchanges of information in addition to
this Directive insofar as this Directive does not derogate
from it.

automatic

exchange of

The
information between
Member States concerning interest payments covered by
this Directive makes possible the effective taxation of
those payments in the beneficial owner's Member State
of residence for tax purposes in accordance with the
national laws of that State. It is therefore necessary to
stipulate that Member States which exchange informa-
tion pursuant to this Directive should not be permitted
to rely on the limits to the exchange of information as
set out in Article 8 of Directive 77/799/EEC.

In view of structural differences, Austria, Belgium and
Luxembourg cannot apply the automatic exchange of
information at
the same time as the other Member
States. During a transitional period, given that a with-
holding tax can ensure a minimum level of effective
taxation, especially at a rate increasing progressively to
35 %, these three Member States should apply a with-
holding tax to the savings income covered by this Direc-
tive.

In order
to avoid differences in treatment, Austria,
Belgium and Luxembourg should not be obliged to
apply automatic exchange of
information before the
the
Swiss Confederation, the Principality of Andorra,
Principality of Liechtenstein, the Principality of Monaco
and the Republic of San Marino ensure
effective
exchange
concerning
information
payments of interest.

request

on

of

tive. It should do so by crediting this withholding tax up
to the amount of tax due in its territory and by reimbur-
sing to the beneficial owner any excess amount of tax
withheld. It may, however, instead of applying this tax
credit mechanism, grant a refund of the withholding tax.

(22)

(23)

(24)

to avoid market disruption,

In order
this Directive
should, during the transitional period, not apply to
interest payments on certain negotiable debt securities.

This Directive should not preclude Member States from
levying other types of withholding tax than that referred
to in this Directive on interest arising in their territories.

So long as the United States of America, Switzerland,
Andorra, Liechtenstein, Monaco, San Marino and the
relevant dependent or associated territories of
the
Member States do not all apply measures equivalent to,
or the same as, those provided for by this Directive,
capital
towards these countries and territories
could imperil the attainment of its objectives. Therefore,
it is necessary for the Directive to apply from the same
date as that on which all these countries and territories
apply such measures.

flight

(25)

The Commission should report every three years on the
operation of this Directive and propose to the Council
any amendments that prove necessary in order better to
ensure effective taxation of savings income and to
remove undesirable distortions of competition.

(26)

This Directive respects the fundamental rights and prin-
ciples which are recognised, in particular, by the Charter
of Fundamental Rights of the European Union,

HAS ADOPTED THIS DIRECTIVE:

Those Member States should transfer the greater part of
their revenue of this withholding tax to the Member
State of residence of the beneficial owner of the interest.

CHAPTER I

INTRODUCTORY PROVISIONS

Those Member States should provide for a procedure
allowing beneficial owners resident for tax purposes in
other Member States to avoid the imposition of this
withholding tax by authorising their paying agent to
report the interest payments or by presenting a certifi-
cate issued by the competent authority of their Member
State of residence for tax purposes.

(21)

The Member State of residence for tax purposes of the
beneficial owner should ensure the elimination of any
double taxation of the interest payments which might
result from the imposition of this withholding tax in
accordance with the procedures laid down in this Direc-

(1) OJ L 336, 27.12.1977, p. 15. Directive as last amended by the

1994 Act of Accession.

Article 1

Aim

1.
The ultimate aim of the Directive is to enable savings
income in the form of interest payments made in one Member
State to beneficial owners who are individuals resident for tax
purposes in another Member State to be made subject to effec-
tive taxation in accordance with the laws of the latter Member
State.

2. Member States shall
take the necessary measures to
ensure that the tasks necessary for the implementation of this
Directive are carried out by paying agents established within
their territory, irrespective of the place of establishment of the
debtor of the debt claim producing the interest.

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Article 2

Definition of beneficial owner

this Directive,

For the purposes of

1.
‘beneficial owner’
means any individual who receives an interest payment or any
individual for whom an interest payment is secured, unless he
provides evidence that it was not received or secured for his
own benefit, that is to say that:

(a) he acts as a paying agent within the meaning of Article

4(1); or

(b) he acts on behalf of a legal person, an entity which is taxed
on its profits under the general arrangements for business
taxation, an UCITS authorised in accordance with Directive
85/611/EEC or an entity referred to in Article 4(2) of this
Directive and,
in the last mentioned case, discloses the
name and address of that entity to the economic operator
making the interest payment and the latter communicates
such information to the competent authority of its Member
State of establishment, or

(c) he acts on behalf of another individual who is the beneficial
owner and discloses to the paying agent the identity of that
beneficial owner in accordance with Article 3(2).

2. Where a paying agent has information suggesting that the
individual who receives an interest payment or for whom an
interest payment is secured may not be the beneficial owner,
and where neither paragraph 1(a) nor 1(b) applies to that indi-
vidual, it shall take reasonable steps to establish the identity of
the beneficial owner in accordance with Article 3(2). If the
paying agent is unable to identify the beneficial owner, it shall
treat the individual in question as the beneficial owner.

Article 3

Identity and residence of beneficial owners

1.
Each Member State shall, within its territory, adopt and
ensure the application of the procedures necessary to allow the
paying agent to identify the beneficial owners and their resi-
dence for the purposes of Articles 8 to 12.

Such procedures shall comply with the minimum standards
established in paragraphs 2 and 3.

2.
The paying agent shall establish the identity of the benefi-
cial owner on the basis of minimum standards which vary
according to when relations between the paying agent and the
recipient of the interest are entered into, as follows:

(a) for contractual relations entered into before 1 January
2004, the paying agent shall establish the identity of the
beneficial owner, consisting of his name and address, by
using the information at its disposal, in particular pursuant
to the regulations in force in its State of establishment and
to Council Directive 91/308/EEC of 10 June 1991 on
prevention of
the financial system for the
purpose of money laundering (1);

the use of

(b) for contractual

transactions
carried out in the absence of contractual relations, on or
after 1 January 2004, the paying agent shall establish the

relations entered into, or

(1) OJ L 166, 28.6.1991, p. 77. Directive as last amended by Directive
2001/97/EC of the European Parliament and of the Council (OJ L
344, 28.12.2001, p. 76).

residence for

identity of the beneficial owner, consisting of the name,
address and, if there is one, the tax identification number
allocated by the Member State of
tax
purposes. These details shall be established on the basis of
the passport or of the official identity card presented by the
beneficial owner. If it does not appear on that passport or
on that official identity card, the address shall be established
on the basis of any other documentary proof of identity
presented by the beneficial owner. If the tax identification
number is not mentioned on the passport, on the official
identity card or any other documentary proof of identity,
including, possibly,
the certificate of residence for tax
purposes, presented by the beneficial owner, the identity
shall be supplemented by a reference to the latter's date and
place of birth established on the basis of his passport or
official identification card.

3.
The paying agent shall establish the residence of the bene-
ficial owner on the basis of minimum standards which vary
according to when relations between the paying agent and the
recipient of the interest are entered into. Subject to the condi-
tions set out below, residence shall be considered to be situated
in the country where the beneficial owner has his permanent
address:

(a) for contractual relations entered into before 1 January
2004, the paying agent shall establish the residence of the
beneficial owner by using the information at its disposal, in
particular pursuant to the regulations in force in its State of
establishment and to Directive 91/308/EEC;

(b) for contractual

relations entered into, or

transactions
carried out in the absence of contractual relations, on or
after 1 January 2004, the paying agent shall establish the
residence of the beneficial owner on the basis of the address
mentioned on the passport, on the official identity card or,
if necessary, on the basis of any documentary proof of
identity presented by the beneficial owner and according to
the following procedure: for individuals presenting a pass-
port or official identity card issued by a Member State who
declare themselves to be resident in a third country, resi-
dence shall be established by means of a tax residence certi-
ficate issued by the competent authority of
the third
country in which the individual claims to be resident.
Failing the presentation of such a certificate, the Member
identity
State which issued the passport or other official
document shall be considered to be the country of resi-
dence.

Article 4

Definition of paying agent

For the purposes of this Directive,

‘paying agent’ means
1.
any economic operator who pays interest to or secures the
payment of interest for the immediate benefit of the beneficial
owner, whether the operator is the debtor of the debt claim
which produces the interest or the operator charged by the
debtor or the beneficial owner with paying interest or securing
the payment of interest.

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Any entity established in a Member State to which
2.
interest is paid or for which interest is secured for the benefit
of the beneficial owner shall also be considered a paying agent
upon such payment or securing of such payment. This provi-
sion shall not apply if the economic operator has reason to
believe, on the basis of official evidence produced by that
entity, that:

(b) for

third countries,

the competent authority for

the
purposes of bilateral or multilateral tax conventions or,
failing that, such other authority as is competent to issue
certificates of residence for tax purposes.

(a) it

is a legal person, with the exception of

those legal

persons referred to in paragraph 5; or

Article 6

(b) its profits are taxed under the general arrangements for

business taxation; or

Definition of interest payment

(c) it is an UCITS recognised in accordance with Directive 85/

611/EEC.

For the purposes of

1.
means:

this Directive,

‘interest payment’

An economic operator paying interest to, or securing interest
for, such an entity established in another Member State which
is considered a paying agent under
this paragraph shall
communicate the name and address of the entity and the total
amount of interest paid to, or secured for, the entity to the
its Member State of establishment,
competent authority of
which shall pass
information on to the competent
this
authority of the Member State where the entity is established.

(a) interest paid or credited to an account, relating to debt
claims of every kind, whether or not secured by mortgage
and whether or not carrying a right to participate in the
debtor's profits, and,
income from govern-
in particular,
ment securities and income from bonds or debentures,
including premiums and prizes attaching to such securities,
bonds or debentures; penalty charges for late payments
shall not be regarded as interest payments;

The entity referred to in paragraph 2 shall, however, have
3.
the option of being treated for the purposes of this Directive as
an UCITS as referred to in 2(c). The exercise of this option shall
require a certificate to be issued by the Member State in which
the entity is established and presented to the economic
operator by that entity.

Member States shall lay down the detailed rules for this option
for entities established in their territory.

4. Where the economic operator and the entity referred to
in paragraph 2 are established in the same Member State, that
Member State shall take the necessary measures to ensure that
the entity complies with the provisions of this Directive when
it acts as a paying agent.

5.

The legal persons exempted from paragraph 2(a) are:

(a) in Finland: avoin yhtiö (Ay) and kommandiittiyhtiö (Ky)/

öppet bolag and kommanditbolag;

(b) in Sweden: handelsbolag (HB) and kommanditbolag (KB).

(b) interest accrued or capitalised at the sale, refund or redemp-

tion of the debt claims referred to in (a);

(c) income deriving from interest payments either directly or
through an entity referred to in Article 4(2), distributed by:

(i) an UCITS authorised in accordance with Directive 85/

611/EEC,

(ii) entities which qualify for the option under Article 4(3),

(iii) undertakings

for

collective

investment

established

outside the territory referred to in Article 7;

(d) income realised upon the sale, refund or redemption of
shares or units in the following undertakings and entities, if
they invest directly or indirectly, via other undertakings for
collective investment or entities referred to below, more
than 40 % of their assets in debt claims as referred to in (a):

(i) an UCITS authorised in accordance with Directive 85/

611/EEC,

(ii) entities which qualify for the option under Article 4(3),

(iii) undertakings

for

collective

investment

established

outside the territory referred to in Article 7.

Article 5

Definition of competent authority

However, Member States shall have the option of including
income mentioned under (d) in the definition of interest only
to the extent that such income corresponds to gains directly or
indirectly deriving from interest payments within the meaning
of (a) and (b).

For the purposes of this Directive, ‘competent authority’ means:

(a) for Member States, any of the authorities notified by the

Member States to the Commission;

2.
As regards paragraph 1(c) and (d), when a paying agent
has no information concerning the proportion of the income
which derives from interest payments, the total amount of the
income shall be considered an interest payment.

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As regards paragraph 1(d), when a paying agent has no
3.
information concerning the percentage of the assets invested in
debt claims or in shares or units as defined in that paragraph,
that percentage shall be considered to be above 40 %. Where
he cannot determine the amount of income realised by the
beneficial owner, the income shall be deemed to correspond to
the proceeds of the sale, refund or redemption of the shares or
units.

4. When interest, as defined in paragraph 1, is paid to or
credited to an account held by an entity referred to in Article
4(2), such entity not having qualified for the option under
Article 4(3), it shall be considered an interest payment by such
entity.

5.
As regards paragraph 1(b) and (d), Member States shall
have the option of requiring paying agents in their territory to
annualise the interest over a period of time which may not
exceed one year, and treating such annualised interest as an
interest payment even if no sale, redemption or refund occurs
during that period.

6.
By way of derogation from paragraphs 1(c) and (d),
Member States shall have the option of excluding from the defi-
nition of interest payment any income referred to in those
provisions from undertakings or entities established within
their territory where the investment in debt claims referred to
in paragraph 1(a) of such entities has not exceeded 15 % of
their assets. Likewise, by way of derogation from paragraph 4,
Member States shall have the option of excluding from the defi-
nition of interest payment in paragraph 1 interest paid or cred-
ited to an account of an entity referred to in Article 4(2) which
has not qualified for the option under Article 4(3) and is estab-
lished within their territory, where the investment of such an
entity in debt claims referred to in paragraph 1(a) has not
exceeded 15 % of its assets.

The exercise of such option by a Member State shall be binding
on other Member States.

The percentage referred to in paragraph 1(d) and para-

7.
graph 3 shall from 1 January 2011 be 25 %.

8.
The percentages referred to in paragraph 1(d) and in para-
graph 6 shall be determined by reference to the investment
policy as laid down in the fund rules or instruments of incor-
poration of the undertakings or entities concerned and, failing
which, by reference to the actual composition of the assets of
the undertakings or entities concerned.

Article 7

Territorial scope

This Directive shall apply to interest paid by a paying agent
established within the territory to which the Treaty applies by
virtue of Article 299 thereof.

CHAPTER II

EXCHANGE OF INFORMATION

Article 8

Information reporting by the paying agent

1. Where the beneficial owner is resident in a Member State
other than that in which the paying agent is established, the
minimum amount of information to be reported by the paying
agent to the competent authority of its Member State of estab-
lishment shall consist of:

(a) the identity and residence of the beneficial owner estab-

lished in accordance with Article 3;

(b) the name and address of the paying agent;

(c) the account number of the beneficial owner or, where there
is none, identification of the debt claim giving rise to the
interest;

(d) information concerning the interest payment in accordance

with paragraph 2.

2.
The minimum amount of information concerning interest
payment to be reported by the paying agent shall distinguish
between the following categories of interest and indicate:

(a) in the case of an interest payment within the meaning of
Article 6(1)(a): the amount of interest paid or credited;

(b) in the case of an interest payment within the meaning of
Article 6(1)(b) or (d): either the amount of
interest or
income referred to in those paragraphs or the full amount
of the proceeds from the sale, redemption or refund;

(c) in the case of an interest payment within the meaning of
Article 6(1)(c): either the amount of income referred to in
that paragraph or the full amount of the distribution;

(d) in the case of an interest payment within the meaning of
Article 6(4): the amount of interest attributable to each of
the members of the entity referred to in Article 4(2) who
meet the conditions of Articles 1(1) and 2(1);

(e) where a Member State exercises the option under Article

6(5): the amount of annualised interest.

However, Member States may restrict the minimum amount of
information concerning interest payment to be reported by the
paying agent to the total amount of interest or income and to
the total amount of the proceeds from sale, redemption or
refund.

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Article 9

Automatic exchange of information

The competent authority of the Member State of the
1.
paying agent shall communicate the information referred to in
Article 8 to the competent authority of the Member State of
residence of the beneficial owner.

2.
The communication of information shall be automatic
and shall take place at least once a year, within six months
following the end of the tax year of the Member State of the
paying agent, for all interest payments made during that year.

3.
The provisions of Directive 77/799/EEC shall apply to the
exchange of information under this Directive, provided that the
provisions of
this Directive do not derogate therefrom.
However, Article 8 of Directive 77/799/EEC shall not apply to
the information to be provided pursuant to this chapter.

CHAPTER III

TRANSITIONAL PROVISIONS

Article 10

Transitional period

During a transitional period starting on the date referred
1.
to in Article 17(2) and (3) and subject
to Article 13(1),
Belgium, Luxembourg and Austria shall not be required to
apply the provisions of Chapter II.

They shall, however,
Member States in accordance with Chapter II.

receive information from the other

During the transitional period, the aim of this Directive shall be
to ensure minimum effective taxation of savings in the form of
interest payments made in one Member State to beneficial
owners who are individuals resident
tax purposes in
another Member State.

for

The transitional period shall end at the end of the first full

2.
fiscal year following the later of the following dates:

— the date of entry into force of an agreement between the
European Community, following a unanimous decision of
the Council, and the last of the Swiss Confederation, the
Principality of Liechtenstein, the Republic of San Marino,
the Principality of Monaco and the Principality of Andorra,
providing for the exchange of information upon request as
defined in the OECD Model Agreement on Exchange of
Information on Tax Matters released on 18 April 2002
(hereinafter the ‘OECD Model Agreement’) with respect to
interest payments, as defined in this Directive, made by
paying agents established within their respective territories
to beneficial owners resident in the territory to which the
Directive applies, in addition to the simultaneous applica-
tion by those same countries of a withholding tax on such
payments at the rate defined for the corresponding periods
referred to in Article 11(1),

— the date on which the Council agrees by unanimity that the
United States of America is committed to exchange of
information upon request as defined in the OECD Model
Agreement with respect to interest payments, as defined in
this directive, made by paying agents established within its
territory to beneficial owners resident in the territory to
which the Directive applies.

3.
At the end of the transitional period, Belgium, Luxem-
bourg and Austria shall be required to apply the provisions of
Chapter II and they shall cease to apply the withholding tax
and the revenue sharing provided for in Articles 11 and 12. If,
during the transitional period, Belgium, Luxembourg or Austria
elects to apply the provisions of Chapter II, it shall no longer
apply the withholding tax and the revenue sharing provided for
in Articles 11 and 12.

Article 11

Withholding tax

1.
During the transitional period referred to in Article 10,
where the beneficial owner is resident in a Member State other
than that in which the paying agent is established, Belgium,
Luxembourg and Austria shall levy a withholding tax at a rate
of 15 % during the first three years of the transitional period,
20 % for the subsequent three years and 35 % thereafter.

2.

The paying agent shall levy withholding tax as follows:

(a) in the case of an interest payment within the meaning of
Article 6(1)(a): on the amount of interest paid or credited;

(b) in the case of an interest payment within the meaning of
Article 6(1)(b) or (d): on the amount of interest or income
referred to in those paragraphs or by a levy of equivalent
effect to be borne by the recipient on the full amount of
the proceeds of the sale, redemption or refund;

(c) in the case of an interest payment within the meaning of
Article 6(1)(c): on the amount of income referred to in that
paragraph;

(d) in the case of an interest payment within the meaning of
Article 6(4): on the amount of interest attributable to each
of the members of the entity referred to in Article 4(2) who
meet the conditions of Articles 1(1) and 2(1);

(e) where a Member State exercises the option under Article

6(5): on the amount of annualised interest.

For the purposes of points (a) and (b) of paragraph 2,
3.
withholding tax shall be levied pro rata to the period of holding
of the debt claim by the beneficial owner. When the paying
agent is unable to determine the period of holding on the basis
of information in its possession,
it shall treat the beneficial
owner as having held the debt claim throughout its period of
existence unless he provides evidence of the date of acquisition.

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The imposition of withholding tax by the Member State
4.
of the paying agent shall not preclude the Member State of resi-
dence for tax purposes of the beneficial owner from taxing the
income in accordance with its national law, subject to compli-
ance with the Treaty.

(b) a procedure which ensures that withholding tax shall not
be levied where the beneficial owner presents to his paying
agent a certificate drawn up in his name by the competent
authority of his Member State of residence for tax purposes
in accordance with paragraph 2.

5.
During the transitional period, Member States levying
withholding tax may provide that an economic operator paying
interest to, or securing interest for, an entity referred to in
Article 4(2) established in another Member State shall be
considered the paying agent in place of the entity and shall levy
the withholding tax on that
interest, unless the entity has
formally agreed to its name, address and the total amount of
interest paid to it or secured for it being communicated in
accordance with the last subparagraph of Article 4(2).

Article 12

Revenue sharing

1. Member States levying withholding tax in accordance
with Article 11(1) shall retain 25 % of
their revenue and
transfer 75 % of the revenue to the Member State of residence
of the beneficial owner of the interest.

2. Member States levying withholding tax in accordance
with Article 11(5) shall retain 25 % of the revenue and transfer
75 % to the other Member States proportionate to the transfers
carried out pursuant to paragraph 1 of this Article.

Such transfers shall take place at the latest within a period
3.
of six months following the end of the tax year of the Member
State of the paying agent in the case of paragraph 1, or that of
the Member State of the economic operator in the case of para-
graph 2.

4. Member States levying withholding tax shall
take the
necessary measures to ensure the proper functioning of the
revenue-sharing system.

Article 13

Exceptions to the withholding tax procedure

1. Member States levying withholding tax in accordance
with Article 11 shall provide for one or both of the following
procedures in order to ensure that the beneficial owners may
request that no tax be withheld:

(a) a procedure which allows the beneficial owner expressly to
authorise the paying agent to report information in accor-
dance with Chapter II, such authorisation covering all
interest paid to the beneficial owner by that paying agent;
in such cases, the provisions of Article 9 shall apply;

2.
At the request of the beneficial owner, the competent
authority of his Member State of residence for tax purposes
shall issue a certificate indicating:

(a) the name, address and tax or other identification number
or, failing such, the date and place of birth of the beneficial
owner;

(b) the name and address of the paying agent;

(c) the account number of the beneficial owner or, where there

is none, the identification of the security.

Such certificate shall be valid for a period not exceeding three
years. It shall be issued to any beneficial owner who requests it,
within two months following such request.

Article 14

Elimination of double taxation

1.
The Member State of residence for tax purposes of the
beneficial owner shall ensure the elimination of any double
taxation which might result from the imposition of the with-
holding tax referred to in Article 11, in accordance with the
provisions of paragraphs 2 and 3.

2.
If interest received by a beneficial owner has been subject
to withholding tax in the Member State of the paying agent,
the Member State of residence for tax purposes of the beneficial
owner shall grant him a tax credit equal to the amount of the
tax withheld in accordance with its national law. Where this
amount exceeds the amount of tax due in accordance with its
national law, the Member State of residence for tax purposes
shall repay the excess amount of tax withheld to the beneficial
owner.

3.
If, in addition to the withholding tax referred to in Article
11, interest received by a beneficial owner has been subject to
any other type of withholding tax and the Member State of
residence for tax purposes grants a tax credit for such with-
holding tax in accordance with its national law or double taxa-
tion conventions, such other withholding tax shall be credited
before the procedure in paragraph 2 is applied.

4.
The Member State of residence for tax purposes of the
beneficial owner may replace the tax credit mechanism referred
to in paragraphs 2 and 3 by a refund of the withholding tax
referred to in Article 11.

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Article 15

Negotiable debt securities

Article 17

Transposition

1.
During the transitional period referred to in Article 10,
but until 31 December 2010 at the latest, domestic and inter-
national bonds and other negotiable debt securities which have
been first issued before 1 March 2001 or for which the original
issuing prospectuses have been approved before that date by
the competent authorities within the meaning of Council Direc-
tive 80/390/EEC (1) or by the responsible authorities in third
countries shall not be considered as debt claims within the
meaning of Article 6(1)(a), provided that no further issues of
such negotiable debt securities are made on or after 1 March
2002. However, should the transitional period referred to in
Article 10 continue beyond 31 December 2010, the provisions
of this Article shall only continue to apply in respect of such
negotiable debt securities:

— which contain gross-up and early redemption clauses and

— where the paying agent as defined in Article 4 is established
in a Member State applying the withholding tax referred to
in Article 11 and that paying agent pays interest to, or
secures the payment of interest for the immediate benefit
of, a beneficial owner resident in another Member State.

If a further issue is made on or after 1 March 2002 of an afore-
mentioned negotiable debt security issued by a Government or
a related entity acting as a public authority or whose role is
recognised by an international treaty, as defined in the Annex,
the entire issue of such security, consisting of the original issue
and any further issue, shall be considered a debt claim within
the meaning of Article 6(1)(a).

If a further issue is made on or after 1 March 2002 of an afore-
mentioned negotiable debt security issued by any other issuer
not covered by the second subparagraph, such further issue
shall be considered a debt claim within the meaning of Article
6(1)(a).

2.
Nothing in this Article shall prevent Member States from
taxing the income from the negotiable debt securities referred
to in paragraph 1 in accordance with their national laws.

CHAPTER IV

MISCELLANEOUS AND FINAL PROVISIONS

Article 16

Other withholding taxes

This Directive shall not preclude Member States from levying
other types of withholding tax than that referred to in Article
11 in accordance with their national laws or double-taxation
conventions.

(1) OJ L 100, 17.4.1980, p. 1. Directive repealed by Directive 2001/
34/EC of the European Parliament and of the Council (OJ L 184,
6.7.2001, p. 1).

Before 1 January 2004 Member States shall adopt and
1.
publish the laws, regulations and administrative provisions
necessary to comply with this Directive. They shall forthwith
inform the Commission thereof.

2. Member States
January 2005 provided that:

shall apply these provisions

from 1

(i) the Swiss Confederation, the Principality of Liechtenstein,
the Republic of San Marino, the Principality of Monaco and
the Principality of Andorra apply from that same date
measures equivalent to those contained in this Directive, in
accordance with agreements entered into by them with the
European Community, following unanimous decisions of
the Council;

(ii) all agreements or other arrangements are in place, which
provide that all the relevant dependent or associated terri-
tories (the Channel Islands, the Isle of Man and the depen-
dent or associated territories in the Caribbean) apply from
that same date automatic exchange of information in the
same manner as is provided for in Chapter II of this Direc-
tive, (or, during the transitional period defined in Article
10, apply a withholding tax on the same terms as are
contained in Articles 11 and 12).

The Council shall decide, by unanimity, at

3.
least six
months before 1 January 2005, whether the condition set out
in paragraph 2 will be met, having regard to the dates of entry
into force of the relevant measures in the third countries and
dependent or associated territories concerned. If the Council
does not decide that the condition will be met, it shall, acting
unanimously on a proposal by the Commission, adopt a new
date for the purposes of paragraph 2.

4. When Member States adopt the provisions necessary to
comply with this Directive, they shall contain a reference to
this Directive or be accompanied by such a reference on the
occasion of their official publication. Member States shall deter-
mine how such reference is to be made.

5. Member States shall forthwith inform the Commission
thereof and communicate to the Commission the main provi-
sions of national law which they adopt in the field covered by
this Directive and a correlation table between this Directive and
the national provisions adopted.

Article 18

Review

this Directive. On the basis of

The Commission shall report to the Council every three years
on the operation of
these
reports, the Commission shall, where appropriate, propose to
the Council any amendments to the Directive that prove neces-
sary in order better to ensure effective taxation of savings
income and to remove undesirable distortions of competition.

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Article 19

Entry into force

This Directive shall enter into force on the 20th day following that of its publication in the Official Journal
of the European Union.

Article 20

Addressees

This Directive is addressed to the Member States.

Done at Luxembourg, 3 June 2003.

For the Council

The President

N. CHRISTODOULAKIS

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ANNEX

LIST OF RELATED ENTITIES REFERRED TO IN ARTICLE 15

For the purposes of Article 15, the following entities will be considered to be a ‘related entity acting as a public authority
or whose role is recognised by an international treaty’:

— entities within the European Union:

Belgium

Spain

Greece

France

Italy

Portugal

Vlaams Gewest (Flemish Region)
Région wallonne (Walloon Region)
Région bruxelloise/Brussels Gewest (Brussels Region)
Communauté française (French Community)
Vlaamse Gemeenschap (Flemish Community)
Deutschsprachige Gemeinschaft (German-speaking Community)

Xunta de Galicia (Regional Executive of Galicia)
Junta de Andalucía (Regional Executive of Andalusia)
Junta de Extremadura (Regional Executive of Extremadura)
Junta de Castilla-La Mancha (Regional Executive of Castilla-La Mancha)
Junta de Castilla-León (Regional Executive of Castilla-León)
Gobierno Foral de Navarra (Regional Government of Navarre)
Govern de les Illes Balears (Government of the Balearic Islands)
Generalitat de Catalunya (Autonomous Government of Catalonia)
Generalitat de Valencia (Autonomous Government of Valencia)
Diputación General de Aragón (Regional Council of Aragon)
Gobierno de las Islas Canarias (Government of the Canary Islands)
Gobierno de Murcia (Government of Murcia)
Gobierno de Madrid (Government of Madrid)
Gobierno de la Comunidad Autónoma del País Vasco/Euzkadi (Government of the Autonomous
Community of the Basque Country)
Diputación Foral de Guipúzcoa (Regional Council of Guipúzcoa)
Diputación Foral de Vizcaya/Bizkaia (Regional Council of Vizcaya)
Diputación Foral de Alava (Regional Council of Alava)
Ayuntamiento de Madrid (City Council of Madrid)
Ayuntamiento de Barcelona (City Council of Barcelona)
Cabildo Insular de Gran Canaria (Island Council of Gran Canaria)
Cabildo Insular de Tenerife (Island Council of Tenerife)
Instituto de Crédito Oficial (Public Credit Institution)
Instituto Catalán de Finanzas (Finance Institution of Catalonia)
Instituto Valenciano de Finanzas (Finance Institution of Valencia)

Οργανισµός Τηλεπικοινωνιών Ελλάδος (National Telecommunications Organisation)
Οργανισµός Σιδηροδρόµων Ελλάδος (National Railways Organisation)
∆ηµόσια Επιχείρηση Ηλεκτρισµού (Public Electricity Company)

La Caisse d'amortissement de la dette sociale (CADES) (Social Debt Redemption Fund)
L'Agence française de développement (AFD) (French Development Agency)
Réseau Ferré de France (RFF) (French Rail Network)
Caisse Nationale des Autoroutes (CNA) (National Motorways Fund)
Assistance publique Hôpitaux de Paris (APHP) (Paris Hospitals Public Assistance)
Charbonnages de France (CDF) (French Coal Board)
Entreprise minière et chimique (EMC) (Mining and Chemicals Company)

Regions
Provinces
Municipalities
Cassa Depositi e Prestiti (Deposits and Loans Fund)

Região Autónoma da Madeira (Autonomous Region of Madeira)
Região Autónoma dos Açores (Autonomous Region of Azores)
Municipalities

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— international entities:

European Bank for Reconstruction and Development
European Investment Bank
Asian Development Bank
African Development Bank
World Bank/IBRD/IMF
International Finance Corporation
Inter-American Development Bank
Council of Europe Soc. Dev. Fund
Euratom
European Community
Corporación Andina de Fomento (CAF) (Andean Development Corporation)
Eurofima
European Coal & Steel Community
Nordic Investment Bank
Caribbean Development Bank

The provisions of Article 15 are without prejudice to any international obligations that Member States may have
entered into with respect to the abovementioned international entities.

— entities in third countries:

Those entities that meet the following criteria:
1. the entity is clearly considered to be a public entity according to the national criteria;
2. such public entity is a non-market producer which administers and finances a group of activities, principally
providing non-market goods and services, intended for the benefit of the community and which are effectively
controlled by general government;

3. such public entity is a large and regular issuer of debt;
4. the State concerned is able to guarantee that such public entity will not exercise early redemption in the event of

gross-up clauses.