COMMISSION STAFF WORKING DOCUMENT presenting an evaluation for the second review of the effects of the Council Direcive 2003/48/EC Accompanying the document REPORT FROM THE COMMISSION TO THE COUNCIL in accordance with Article 18 of Council Directive 2003/48/EC on taxation of savings income in the form of interest payments
Date: 2012-03-02
Institutions: European Commission
Subjects: Bank for International Settlements, European Central Bank, European tax cooperation, Eurostat, International Monetary Fund, Switzerland, disclosure of information, interest, savings, tax evasion, tax on investment income

EUROPEAN COMMISSION 

Brussels, 2.3.2012  
SWD(2012) 16 final 

COMMISSION STAFF WORKING DOCUMENT 

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

Accompanying the document 

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

{COM(2012) 65 final} 

EN 

   EN 

 
 
 
  
 
TABLE OF CONTENTS 

1. 

2. 

2.1. 

2.2. 

2.3. 

2.4. 

2.5. 

3. 

3.1. 

3.2. 

3.3. 

3.4. 

3.5. 

3.6. 

3.7. 

3.8. 

Introduction .................................................................................................................. 3 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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COMMISSION STAFF WORKING DOCUMENT 

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

Accompanying the document 

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

1. 

INTRODUCTION 

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

2011 Report and the Commission Staff Working Document 

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

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

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

The second report and this document's aims are not to identify any loopholes in the Directive 
since they were already identified in the report for the first review of the Directive (the "2008 

1 

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2003:157:0038:0048:en:PDF  

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Report")2.  Such  loopholes  have  been  addressed  in  an  amending  proposal3  adopted  by  the 
Commission on 13 November 2008 ("the Proposal") and the latest Council compromise text 
elaborated on the basis of the Proposal. Rather, the aim is to provide a more in-depth analysis 
of  the  implementation  and  functioning  of  the  Directive  and  to  analyse  available  evidence 
relevant to the issues addressed in the Proposal. The main findings of this document including 
the  widespread  use  of  offshore  jurisdictions  for  intermediary  entities  and  the  growth  in  key 
markets  that  provide  products  comparable  to  debt  claims  reinforce  the  arguments  for 
extending the scope of the Directive and the relevant agreements. The main findings of this 
document are reflected in the second (2011) Report from the Commission to the Council. 

2008 Report and Amending Proposal 

The  2008  Report  covered  the  transposition  and  implementation  of  the  Directive.  It 
summarised  the  economic  evaluation  and  recommendations  contained  in  the  Commission's 
services  working  document4.  The  changes  identified  to  the  Directive  recommended  in  the 
2008 Report were designed to clarify certain interpretational issues and to close loopholes. To 
that  end,  the  Commission  adopted  an  amending  proposal5  on  13  November  2008  to  the 
Directive (the "Proposal") with a view to closing existing loopholes and better preventing tax 
evasion.  The  Proposal  was  accompanied  by  an  Impact  Assessment6.  In  particular,  the 
Proposal seeks to improve on two major aspects of the Directive, i.e. to (i) better ensure the 
taxation  of  interest  payments  which  are  channelled  through  intermediate  tax-exempted 
structures;  and  to  (ii)  extend  the  scope  of  the  Directive  to  income  equivalent  to  interest 
obtained through investments in some innovative financial products as well as in certain life 
insurance products. 

2 

3 

4 

5 

6 

552 

Report  from  the  Commission  to  the  Council  in  accordance  with  Article  18  of  Council  Directive 
2003/48/EC  on  taxation  of  savings  income  in  the  form  of  interest  payments,  Brussels,  15.9.2008, 
COM(2008) 
final, 
http://ec.europa.eu/taxation_customs/resources/documents/taxation/personal_tax/savings_tax/savings_d
irective_review/com%282008%29552_en.pdf  
Proposal for a Council Directive amending Directive 2003/48/EC on taxation of savings income in the 
form of interest payments, Brussels, 13.11.2008, COM(2008) 727 final, 
http://ec.europa.eu/taxation_customs/resources/documents/taxation/personal_tax/savings_tax/savings_d
irective_review/com%282008%29727_en.pdf  
Detailed in the Commission Staff Working Document presenting an economic evaluation of the effects 
of  Council  Directive  2003/48/EC  on  the  basis  of  the  available  data,  Brussels,  15.9.2008,  SEC(2008) 
2420 
http://ec.europa.eu/taxation_customs/resources/documents/taxation/personal_tax/savings_tax/savings_d
irective_review/sec%282008%292420.pdf  
Proposal for a Council Directive amending Directive 2003/48/EC on taxation of savings income in the 
form of interest payments, Brussels, 13.11.2008, COM(2008) 727 final, 
http://ec.europa.eu/taxation_customs/resources/documents/taxation/personal_tax/savings_tax/savings_d
irective_review/com%282008%29727_en.pdf  
Commission Staff Working Document Impact Assessment, Brussels, 13.11.2008, SEC(2008) 2767, 
http://ec.europa.eu/taxation_customs/resources/documents/taxation/personal_tax/savings_tax/savings_d
irective_review/sec%282008%292767_en.pdf and Commission Staff Working Document Impact 
Assessment Summary Brussels, 13.11.2008, SEC(2008) 2768, 
http://ec.europa.eu/taxation_customs/resources/documents/taxation/personal_tax/savings_tax/savings_d
irective_review/sec%282008%292768_en.pdf  

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The  European  Parliament  supported  the  Proposal  by  its  legislative  resolution7  on  24  April 
2009 and the European Economic and Social Committee did likewise by its opinion8 adopted 
on  13  May  2009.  The  Proposal  is  still  under  discussion  at  Council  level,  building  on 
unanimous conclusions adopted on 2 December 20089 and on 9 June 200910.  

The  latest  compromise  text11  is  considered  by  the  Commission  to  have  received  sufficient 
consensus from Member States to enable the commencement of negotiations with the 5 third 
European  countries  to  update  the  Savings  Agreements  with  them.  On  17  June  2011  the 
Commission  adopted  a  recommendation  to  start  negotiations  with  these  third  countries  to 
bring  the  EU  Savings  Agreements  in  line  with  the  amendments  to  the  Directive.  The 
recommendation was presented at the ECOFIN Council on 12 July 2011. 

2. 

FUNCTIONING OF THE DIRECTIVE 

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

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

(2.1) Ad-hoc report on the correct and effective application of the Savings Taxation Directive 
(SEC (2011)775 final12); 

(2.2)  Results  of  a  questionnaire  sent  to  tax  administrations  on  the  use  of  the  data  under  the 
Directive, complemented by a discussion at the meeting of the Commission expert group on 
Administrative Cooperation in Direct Taxation13 of 28/09/2011;  

7 

8 

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10 
11

12

European Parliament legislative resolution of 24 April 2009 on the proposal for a Council directive 
amending Directive 2003/48/EC on taxation of savings income in the form of interest payments 
(COM(2008)0727 – C6-0464/2008 – 2008/0215(CNS)) 
http://www.europarl.europa.eu/sides/getDoc.do?type=TA&reference=P6-TA-2009-0325&language=en  
Opinion of the European Economic and Social Committee on the Proposal for a Council Directive 
amending Directive 2003/48/EC on taxation of savings income in the form of interest payments 
COM(2008) 727 final - 2008/0215 (CNS) 
http://eescopinions.eesc.europa.eu/EESCopinionDocument.aspx?identifier=ces\eco\eco242\ces884-
2009_ac.doc&language=EN  
http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ecofin/104530.pdf  
http://www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ecofin/108392.pdf  

http://register.consilium.europa.eu/servlet/driver?page=Result&lang=EN&typ=Advanced&cm
sid=639&ff_COTE_DOCUMENT=6946%2F11&ff_COTE_DOSSIER_INST=&ff_TITRE=&ff_FT_T
EXT=&ff_SOUS_COTE_MATIERE=&dd_DATE_DOCUMENT=&dd_DATE_REUNION=&fc=RE
GAISEN&srm=25&md=100&ssf=DATE_DOCUMENT+DESC  

http://ec.europa.eu/taxation_customs/resources/documents/taxation/personal_tax/savings_tax/i

mplementation/sec(2011)775_en.pdf 

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

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

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

2.1. 

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

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

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

Identification of paying agents 

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

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

It must be noted that the Proposal contains provisions meant to eliminate the above mentioned 
problems,  especially  for  the  more  controversial  cases  of  entities  and  legal  arrangements 

13 

ACDT:  Commission  expert  group  of  national  experts  on  Administrative  Cooperation  in  the  field  of 
Direct Taxation.  

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falling under Article 4(2) of the Directive. The criteria for the place of effective management 
of entities or legal arrangements are detailed extensively. 

Beneficial owners 

Five questions on beneficial owners' issues deal with the interpretation of situations where the 
individual receiving the interest payment provides evidence that the payment is not received 
or secured for his own benefit. 4 Member States provided details on the type of evidence used 
if  an  individual  claims  to  have  received  the  interest  payment  on  another’s  behalf  and  2 
Member  States  cited  specifically  the  Anti-Money  Laundering  Directive14,  while  most 
Member States outlined principles rather than citing actual types of evidence. 

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

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

Identity and residence 

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

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

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

14  Directive 2005/60/EC of the European Parliament and of the Council of 26 October 2005 on the 
prevention of the use of the financial system for the purpose of money laundering and terrorist financing 
(Text with EEA relevance) 

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

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

Residual entities/paying agents upon receipt 

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

An  additional  question  requested  further  information  on  the  second  residual  entity  test  - 
whether  the  entity’s  profits  are  taxed  under  the  general  arrangements  for  business  taxation 
(‘subject-to-tax  test’,  Article  4(2)(b)  of  the  Directive).  Two  different  solutions  have  been 
retained  by  Member  States  in  regard  to  this  test.  According  to  the  first  solution,  the  test  is 
passed (i.e. the entity is not a residual entity) even if the entity’s profits are not taxed at entity 
level but are taxed at the beneficial owner level16. Under the second solution, the entity whose 
profits are not taxed through the entity itself but via its beneficial owners would not pass the 
subject-to-tax  test  and  would  have  to  be  treated  as  a  ‘paying  agent  upon  receipt/residual 
entity’ by the upstream economic operator making an interest payment to it. The first solution 
is shared by 5 Member States. 

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

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

15 

16 

This is confirmed by the scarce data received from the Member States' submissions on the information 
exchanged. 
While full taxation would arguably be ensured if all the entity’s beneficial owners were residents in the 
Member  State  in  which  the  entity  is  established  (with  that  Member  State  treating  the  entity  as 
transparent  and  taxing  its  beneficial  owners  directly),  it  may  not  always  be  ensured  if  the  beneficial 
owners are resident elsewhere (e.g. the other Member State treats the non-resident entity as opaque or is 
unable to ensure taxation for other reasons). 

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Definition of interest payments 

The questionnaire referred to the application of the concepts of substance over form and abuse 
of law with regard to the definition of interest in the application of double taxation treaties17 
and  asked  whether  the  same  concepts  are  applied  when  implementing  Article  6  of  the 
Directive.  It  also  asked  whether  there  is  a  list  of  products  that  could  potentially  be  re-
classified  as  interest-producing  debt  claims.  Either  substance  over  form  or  abuse  of  law  is 
used  by  16  Member  States  in  the  application  of  the  Directive,  but  none  of  those  Member 
States  have  a  list  of  products  or  examples  that  could  potentially  be  re-classified  as  interest-
producing debt claims.  

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

Supervision of paying agent obligations 

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

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

Agreements with non-EU countries and territories 

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

Conclusion 

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

17 

The question refers in the first place to the application of those principles with regard to double taxation 
treaties  because  the  definition  of  interest  under  Article  6(1)(a)  of  the  Directive  is  identical  to  the 
definition of interest under Article 11 of the OECD Model Tax Convention (and paragraph 21.1 of the 
Commentary to Article 11 might therefore be invoked ). 

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2.2. 

Questionnaire on the use of data 

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

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

Questionnaire on the use of data 

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

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

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

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

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

EN 

10 

   EN 

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

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

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

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

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

In order to facilitate the transmission of data by paying agents to their tax authorities under 
the Directive, the Commission could consider, if Member States so wish, using a central web-
based  application  for  paying  agents  to  download  the  standard  FISC  153  format  using  a 
common character encoding for exchange of information under the Directive. This application 
would be the one that will be developed in future for eForms for the implementation of the 

EN 

11 

   EN 

new  Directive18  on  Administrative  cooperation  in  the  field  of  (direct)  taxation  (Council 
Directive 2011/16/EU of 11 March 2011) and would provide the following advantages: an on-
line application with built in controls on the input of data; very low implementation costs for 
Member States; no deployment would be necessary; and maintenance could be simplified and 
centralised at Commission level. 

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

Most Member States replied that they had not used this data for this purpose or are not aware 
of the results given that it is part of the general audit process of taxpayers, as commented by 
them  for  question  1)  of  the  questionnaire.  However,  even  for  those  Member  States  who 
replied that the use of the data from the Directive was not relevant to their country as interest 
income  is  not  taxed19,  this  data  would  nevertheless  be  of  use  to  tax  administrations  for 
identifying assets held abroad. 

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

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

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

Although most Member States have not yet undertaken a quantitative assessment, those that 
have  carried  out  an  assessment  have  indicated  positive  compliance  results.  It  appears 
nevertheless that the collection/control systems of Member States may not be able to provide 

18

19 

EN 

http://ec.europa.eu/taxation_customs/taxation/tax_cooperation/mutual_assistance/direct_tax_di

rective/index_en.htm 
EE, LT indicated in their replies that interest income is exempt in their country. 

12 

   EN 

                                                 
 
them with information that is specific enough for income amounts falling under the Directive 
to gauge increased compliance. 

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

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

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

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

Conclusion: 

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

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

2.3. 

Statistics provided by Member States on the application of the Directive  

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

EN 

13 

   EN 

In its Conclusions20 of the meeting of 12/05/2008, the Council lists for the first time a set of 
statistics  which  could  be  used  by  the  Commission  services  to  assess  the  efficiency  and 
effectiveness  of  the  Directive.  The  Commission  may  thus  quote  data  contained  in  those 
statistics  in  its  report  under  Article  18  of  that  Directive,  if  it  deems  necessary  for  such  an 
assessment. The statistics in question are the following: 

• 

• 

• 

• 

Amount of interest payments/sales proceeds between MS21: For the Member States 
exchanging information or availing of the voluntary disclosure provision (of Article 
13(1)  of  the  Directive),  the  amount  of  interest  payments  and  sales  proceeds  within 
their territory subject to exchange of information (under Article 9 of the Directive), 
split by Member State. The amount of interest by type according to the categories of 
Article 8(2) of the Directive split by Member State. 

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

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

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

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

Table  (1)  below  shows  the  evolution  of  interest  payments  and  sales  proceeds  reported  by 
Member States using information exchanged and sent to other Member States. Data submitted 
for this review has increased significantly from the first review of the Directive. Furthermore, 
in  the  ACDT  meeting  of  28  September,  Member  States  reported  a  high  submission  rate  of 
data from other Member States as stipulated in the working arrangements of the ACDT group. 
All  Member  States  have  submitted  information  to  the  Commission  up  to  and  including  the 
fiscal  year  200922,  apart  from  Ireland  that  had  technical  problems  in  compiling  the  data  for 
2009, and Sweden which has not provided the Commission with the exchange of information 
data element since the inception of the Directive. 

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

20 
21 

22 

http://register.consilium.europa.eu/pdf/en/08/st09/st09467.en08.pdf 
The  Conclusions  also  refer  to  Dependent  and  Associated  Territories,  however  this  part  of  the  review 
will not specifically assess the use of data between third countries and dependent/associated territories. 
Deadline: 30/06/2011 

EN 

14 

   EN 

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

EU  Member 
States 

2005 (2nd 
half)

2006 

2007 

2008 

2009 

Austria 

Belgium 

Bulgaria** 

Cyprus 

Czech 
Republic 

Germany 

Denmark 

Estonia 

Spain 

Finland 

France 

Greece 

Hungary 

Ireland 

Italy 

Lithuania 

Latvia 

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

1,54

n.a.  202,5623

n.a. 

n.a.

2,03 

3,64

5,26

15,05

25,41

32,39 

35,62

2,92

17,81

26,75

24,49 

14,50

660,73

1392,06

942,09

761,75  1125,00

-.

-.

415,31

693,10

168,94 

164,91

4,40

-.

1,34 

0,89

488,11

423,42

421,21

383,02 

295,61

26,02

60,93

7,80

18,13 

3,49

568,14

2020,04

2485,41

2495,89  1576,99

6,85

23,11

19,46

25,21 

13,98

-

5,22

6,60

11,13 

20,56

258,88

771,00

1901,24

1403,27 

n.a.

280,53

1615,92

1232,97

1913,71  3407,78

-

0,18

0,09

0,65

0,18

1,38

0,37 

2,12 

0,47

1,93

Luxemburg 

1119,79

4188,68

6344,34

5650,77  1641,40

23 

Austria  has  reported  information  exchanged  in  their  statistics  in  2009  despite  coming  under  the 
withholding tax regime of the Directive and not having a voluntary disclosure provision in place. At the 
time  of  the  preparation of  this  report,  the Commission  has  not received  any  explanation from  AT for 
this  statistic  regarding  whether  it  would  derive  from  information  exchanged  under  Art.  4(2)  or  could 
otherwise be justified.  

EN 

15 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                 
Malta 

1,02

2,10

1,73

4,75 

2,68

Netherlands 

107,83

800,14

389,14

408,06 

481,18

Poland 

Portugal 

Romania** 

Sweden 

Slovenia 

Slovakia 

United 
Kingdom 

Total 

Third 
Countries 

Switzerland 

0,00

15,40

10,05

5,57 

7,38

-

n.a

-

0,59

1,87

0,56

n.a.

-.

1,35

4,76

5,18

7,34

-.

17,68 

21,12

10,75 

22,39

-. 

-.

1,48

3,07 

37,93

-

8,25 

3,25

9132,49

485,38 24425,01

3356,86 

808,29

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

70,50

549,12

500,89

516,80 

444,30

Dependent and Associated Territories 

Anguilla 

Aruba 

Guernsey 

Jersey 

Cayman 
Islands 

Netherland 
Antilles 

Montserrat 

-.

0,01

-

-

-

-

- 

-

0,09

0,18

0,24 

0,12

-

-

-

-

775,95 

148,90

410,61 

-

8,81

18,02

25,55

17,48 

8,78

-

-

0,05

-

-

-

0,09 

0,63

- 

-

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

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

EN 

16 

   EN 

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

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

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

Member 
State 

2005 (2nd 
half) 

2006 

2007 

2008 

2009 

AT 

BE 

BG 

CY 

CZ 

DE 

DK 

EE 

EL 

ES 

FI 

FR 

n.a. 

n.a. 

n.a. 

5,23 

2,92 

n.a. 

n.a. 

n.a. 

n.a. 

n.a. 

1,42 

15,01 

25,44 

7,82 

9,68 

n.a. 

n.a. 

2,03 

32,39 

11,52 

47,6823 

n.a. 

3,64 

35,61 

8,33 

109,08 

181,82 

158,14 

196,48 

287,70 

- 

- 

119,90 

124,90 

51,26 

58,37 

4,40 

- 

1,34 

0,89 

6,69 

22,83 

19,46 

25,20 

13,98 

224,25 

198,86 

273,30 

256,21 

220,91 

26,02 

60,93 

7,80 

2,86 

1,85 

41,1 

113,55 

123,63 

149,88 

123,78 

EN 

17 

   EN 

HU 

IE 

IT 

LT 

LU 

LV 

MT 

NL 

PL 

PT 

RO 

SE 

SI 

SK 

UK 

- 

3,72 

3,06 

131,14 

426,96 

795,36 

11,3 

124,91 

141,84 

- 

0,09 

0,18 

7,07 

290,5 

84,12 

0,37 

17,10 

- 

803,16 

0,48 

76,79 

270,46 

368,01 

432,54 

102,83 

0,17 

1,01 

0,64 

2,10 

1,32 

1,73 

2,12 

4,62 

1,93 

2,65 

88,08 

789,42 

200,30 

232,98 

236,73 

- 

2 k 

n.a. 

- 

0,6 

0,95 

7,28 

,56 

n.a. 

- 

1,35 

4,52 

10,05 

3,74 

7,31 

- 

1,48 

- 

5,57 

16,93 

10,75 

- 

3,07 

7,76 

7,37 

20,22 

22,14 

- 

37,54 

2,53 

293,63 

293,90 

1.282,93 

562,69 

259,39 

Total 

1.018,96 

2.651,03 

3.561,08 

2.390,26 

2.316,81 

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

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

Euro (interest rate over 
all maturities 

UK (interest rates 
maturities up to 2 years) 

2005 

2006 

2007 

2008 

2009 

2,42% 

2,54% 

3,04% 

3,58% 

2,84% 

4,59% 

4,52% 

5,29% 

5,59% 

3,87% 

Interest rates have remained relatively stable until the end of 2008 when the financial crisis 
emerged after which interest rates on deposits fell significantly. Interest payments received by 
households also depend on the maturities of interest deposits within the respective years. Data 

EN 

18 

   EN 

 
from the ECB on deposits held by households in the euro-area has shown an increase in the 
share of overnight deposits24 from 24,51% of total deposits in 2003 to 46,38% in 2011. This 
has largely been at the expense of the share of deposits with a maturity up to one year which 
have fallen from 47,37% in 2003 of total deposits to 25,55% in 2011. This would normally 
result in lower interest payments received due to the lower interest rate on overnight deposits 
compared to deposits with a maturity.  

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

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

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

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

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

24 

ECB  data  definition:  deposits  which  are  convertible  into  currency  and/or  which  are  transferable  on 
demand by cheque, banker's order, debit entry or similar means, without significant delay, restriction or 
penalty. 

EN 

19 

   EN 

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

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

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

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

Member  States  should  continue  their  work  in  the  ACDT  group  on  how  to  improve  the 
reporting  of  the  income  elements  exchanged  under  the  Directive.  This  work  and  the 
collaboration  between  Member  States  is  important  not  just  for  this  Directive  but  for  the 
technical framework to be designed for automatic exchange of information to be provided by 
the new Directive25 on Administrative cooperation. 

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

Withholding tax: 

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

25

EN 

http://ec.europa.eu/taxation_customs/taxation/tax_cooperation/mutual_assistance/direct_tax_di

rective/index_en.htm 

20 

   EN 

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

EU Member States 

2005 (2nd half)

2006

2007 

2008

2009

Austria 

Belgium 

Luxemburg 

Total 

Third Countries 

Andorra 

Liechtenstein 

Monaco 

San Marino 

Switzerland 

Total 

9,48

7,51

44,32

59,53 

67,01

49,48

19,61

25,92 

-.

-a.

35,90

124,59

153,00 

174,72

122,95

52,89

188,52

238,45 

241,72

172,43

3,50

1,94

3,75

1,13

12,77

16,34 

18,84

13,94

7,08

9,06 

11,30

7,17

11,70

-. 

-.

-.

7,47

10,75 

15,40

14,02

77,23

255,92

298,23 

348,90

265,64

87,54

294,93

334,39 

394,43

300,78

Dependent and Associated Territories 

British Virgin Islands 

Turks and Caicos 

Guernsey 

Jersey 

Isle of Man 

0,00

0,01

4,93

-

0,02

16,83

- 

- 

- 

-.

-

14,24

13,26

32,15

38,34 

33,55

13,26

20,35

23,39 

16,89

Netherlands Antilles 

-

0,05

0,15 

0,08

-

-

5,51

9,94

7,12

0,11

Total 

Overall total 

31,47

69,39

61,88 

64,76

22,67

171,90

552,84

634,73 

700,92

495,87

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

EN 

21 

   EN 

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

Conclusion: 

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

2.4. 

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

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

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

The contribution of EBF27 related to its comments on the text of the Presidency compromise 
elaborated  on  the  basis  of  the  Proposal  (version  FISC  170  text28)  and  released  on  25 
November 2009. . The EBF has graded its comments according to their level of importance 
including the following which they deem as being very important: 

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

26

27 
28 

EN 

http://ec.europa.eu/taxation_customs/taxation/personal_tax/savings_tax/savings_directive_revi

ew/index_en.htm 
EBF: the European Banking Federation 
Interinstitutional File: 2008/0215 Link to Council website: http://www.consilium.europa.eu/documents?lang=en

22 

   EN 

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

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

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

In  its  contribution,  CEA29  was  concerned  about  the  possible  risk  of  the  duplication  of 
reporting requirements of the Proposal and the new Directive on administrative cooperation, 
Council Directive 2011/16/EU, in addition to the consequences for the competitiveness of the 
European  insurance  industry  in  comparison  with  non-EU  financial  centres.  CEA  considers 
that the Commission should wait until the new Directive on administrative cooperation25 has 
been implemented, in particular on the list of information to be exchanged under Article 8 of 
the  Directive,  before  considering  the  new  reporting  requirements  contained  in  the  Proposal. 
CEA  also  considers  that  the  new  reporting  requirements  should  have  been  included  in  the 
scope  of  the  study  to  measure  the  start  up  and  recurrent  costs  of  implementation  of  the 
Directive  (see  following  section  2.5).  CEA  also  provided  details  on  cross-border  insurance 
premiums, which are given in Section 3.8 of this document. 

EFAMA30 stated that their comments submitted in July 2009 remain valid. They stressed the 
importance  of  achieving  a  level  playing  field  between  competing  investment  products  like 
investment  funds  and  certain  insurance  products  which  are  marketed  to  retail  investors  and 
fulfil the same investment needs. In particular EFAMA considered that the Proposal did not 
achieve  this  aim  by  containing  a  grandfathering  provision  for  insurance  contracts  issued 
before  1  July  2010.  Secondly,  EFAMA  considered  that  the  Commission  should  reflect  on 
providing generally applicable guidelines for the new rules regarding insurance products that 
will  enter  the  scope  of  the  Directive.  Finally,  EFAMA  provided  data  on  the  UCITS/non-
UCITS ratio and the investment pattern of those (between debt and equity) details of which 
can be found in Section 3.6 of this document.  

EFSA31  confirmed  its  comments  for  the  first  review  made  to  the  Commission  of  the  letters 
dated  24  April  2008  and  21  May  2007.  EFSA  also  supported  the  comments,  including  the 
need  for  clarity  and  practicality  in  the  Directive,  made  by  EBF  (see  above).  In  order  to 
maintain a level playing field with market operators in non EU jurisdictions, EFSA stressed 
that  any  tightening  of  the  provisions  of  the  existing  Directive  must  at  the  very  least  be 
matched  by  corresponding  tightening  for  the  "equivalent  measures"  which  are  in  place 

29 
30 
31 

CEA: Comité Européen des Assurances 
EFAMA: European Fund and Asset Management Association Ltd. 
EFSA: the European Forum of Securities Associations  

EN 

23 

   EN 

                                                 
(Savings  taxation  agreements)  in  Switzerland,  Liechtenstein,  and  the  other  "third  countries" 
and  dependent  territories.  According  to  EFSA  the  lack  of  a  level  playing  field  is  already 
present with the Directive and related Savings tax agreements and EFSA is concerned that the 
Proposal  might  accentuate  these  effects.  Secondly,  any  changes  that  are  to  be  made  to  the 
Directive should ensure that adequate time is provided for Member States to draw up and to 
implement  the  necessary  local  fiscal  rules  in  order  to  give  paying  agents  sufficient  time  to 
implement the necessary system changes.  

In  its  contribution,  FECIF32  provided  a  cost  study  on  administrative  burden  among  its 
members  which  indicated  that  20%  of  their  costs  are  taken  up  with  legal,  compliance  and 
regulatory obligations including those linked to the Directive. Therefore, FECIF stressed the 
importance  of  ensuring  that  a  disproportionate  administrative  burden  is  not  imposed  on 
paying agents by the Directive. 

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

EuroInvestors33  proposed  an  expert  who  was  nominated  to  the  group  in  2011.  In  order  to 
safeguard the interests of investors, EuroInvestors suggests that the Directive should contain 
an  obligation  or  at  least  a  recommendation  from  the  Member  State  of  residence  of  the 
beneficial  owner  to  grant  full  relief  from  double  taxation  by  taking  into  account  the  taxes 
already paid in the country of the source of income. Secondly, there should be an obligation 
for paying agents to disclose, free of charge and in a timely manner, a spreadsheet detailing 
for  each  'saving  income'  the  withholding  tax  levied  pursuant  to  the  Directive.  The 
Commission  considers  that  both  proposals  do  merit  further  consideration,  but  would  not  fit 
within the scope of the current Proposal. 

2.5. 

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

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

• 

• 

• 

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

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

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

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

32 
33 

FECIF: Fédération Européenne des Conseils et Intermédiaires Financiers 
EuroInvestors:  the  European  Federation  of  Investors/  Fédération  Européenne  des  Epargnants  –  a 
European federation representing the interests of all individual financial services customers. 

EN 

24 

   EN 

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

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

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

Results of the study: 

In terms of the start-up and recurrent costs, the Directive is not considered to be particularly 
burdensome. For all EU Member States (apart from Austria, Belgium and Luxemburg), IO1 
has been estimated at 114 million Euro per annum which represents 1,2% of the total interest 
payments/sales  proceeds34.  For  Luxemburg,  using  a  different  method  of  extrapolation,  the 
administrative  burden  was  estimated  at  EUR  35  million.  No  extrapolation  was  possible  for 
Belgium and Austria due to data limitations. It should be noted that these figures should be 
interpreted  with  caution  due  to  the  low  participation  rate  of  paying  agents  in  the  study. 
Nevertheless,  the  majority  of  respondents  noted  that  the  information  needed  to  fulfil  this 
obligation  is  already  available  to  them  under  Anti-money  laundering  legislation14,  domestic 
legislation or internal business practices. 

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

In terms of the provisions for IO1, respondents reported that the most burdensome activities 
involve understanding the requirements of the Directive, training, and getting acquainted with 
the  IO.  In  terms  of  products,  classifying  the  proceeds  from  sales  of  UCITS  income  to  see 
whether they fall within the provisions of the Directive are difficult to monitor as they are not 
business as usual costs and therefore bring a high administrative burden35. 

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

34 

35 

Total  excludes  AT/BE  and  LU  figures  and  includes  estimate  for  IE  using  2008  figures.  Figure  in 
Deloitte's report suggests this is 0,5%, which is based on, where available, 2009 figures or the average 
of sales proceeds/interest income reported over the period 2005-2009. 
It  should  be  noted  that  if  the  paying  agent  has  no  information  about  the  part  of  the  distribution 
pertaining  to  interest  income  or  the  investment  in  debt  claim  by  the  UCITS,  it  would  still  be  able  to 
report this information using certain assumptions allowed under the Directive. 

EN 

25 

   EN 

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

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

3. 

ECONOMIC EFFECTS AND ANALYSIS 

3.1. 

International deposits – BIS international locational banking statistics 

Description 

The  International  Locational  Banking  Statistics  of  the  Bank  for  International  Settlements 
(BIS)  includes  quarterly  data  on  assets  and  liabilities  of  domestic  banks  and  branches  of 
foreign  banks  situated  in  the  43  reporting  countries  broken  down  on  a  bilateral  basis 
according to the vis-à-vis36 country of their foreign  counterparts.  The positions are reported 
on a gross37 and unconsolidated38 basis and in USD million. 

The  reporting  countries  include  most  OECD  countries39,  several  developing  countries  and 
some offshore financial centres40. From the financial centres reporting to the BIS that are part 
of the Savings agreements network, only Switzerland and Guernsey agreed to disclose their 
bilateral data through the BIS for the purpose of the Directive's review. None of the offshore 
financial  centres41 which  are  not  part of the  Savings  agreements network agreed to disclose 
their bilateral data. 

A  breakdown  of  the  data  by  instrument,  currency,  sector,  country  of  residence  of 
counterparty, and country of the reporting banks is available. The breakdown by instrument 
provides details for principal items of international assets (loans) and liabilities (deposits) that 
are not represented by negotiable securities. These loans and deposits reflect both interbank 
positions and inter-office/branch balances. The sectoral breakdown includes the international 
positions with non-banks as an "of which" item, which allows a separate analysis of non-bank 

36 

37 
38 
39 

40 

41 

A vis-à-vis country is the country of the foreign depositor, e.g. a deposit in a French bank by a German 
depositor would be represented by France as a reporting country and Germany as a vis-à-vis country. 
Claims  and  liabilities  vis-à-vis  residents  of  respective  reporting  counties  are  also  available  in  the 
locational banking statistics but are excluded from this analysis 
Derivatives subject to a master netting agreement are reported on a net basis. 
Including positions with own affiliates. 
Of those, the following Member States report to the BIS – Austria, Belgium, Denmark, Finland, France, 
Germany,  Greece,  Ireland,  Italy,  Luxemburg,  Netherlands,  Portugal,  Spain,  Sweden  and  the  United 
Kingdom. 
Of those, the following financial centres that are part of the Savings agreements network report to the 
BIS – Switzerland, Cayman Islands, Guernsey, Jersey, Isle of Man and Netherlands Antilles. 
BIS  definition:  countries  with  banking  sectors  dealing  primarily  with  non-resident  and/or  foreign  currency  on  a  scale  out  of 
proportion 
countries: 
host 
http://www.bis.org/statistics/locbankstatsguide.pdf 

economy. 

guide 

these 

Page 

lists 

size 

the 

the 

the 

75 

of 

of 

to 

EN 

26 

   EN 

                                                 
balances. Non-bank balances would include any non-bank borrower/depositor, i.e. non-bank 
financial institutions, non-financial companies, individuals and other entities42. 

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

Studies that use the data 

In  Johannesen  (2010)43,  based  on  BIS  data,  the  author  estimates  the  effect  of  the  entry  into 
force  of  the  EU-Swiss  Savings  Tax  Agreement44  on  Swiss  bank  deposits  held  by  EU 
residents. The Swiss bank deposits held by EU residents are used as a treatment group, while 
the Swiss bank deposits held by non-EU residents is used as a control group. The study finds 
that  around  the  time  of  the  entry  into  force  of  the  Agreement  the  deposits  of  EU  residents 
decreased by more than 40% and claims that the estimated treatment effect is large and very 
robust,  with  implied  elasticity  in  the  range  2.5-3.  The  entry  into  force  of  the  Agreement  is 
seen as a turning point in the evolution of deposits of EU residents and non-EU residents. The 
author finds that the average annual growth rates for the quarters after the entry into force of 
the Agreement (-9.1% for EU vs. 19.2% for non-EU) as proof of the impact on deposits of EU 
residents. Johannesen finds similar reactions, although not as strong and definite, with regard 
to Luxemburg and Jersey.  

While acknowledging that the sectoral breakdown for the "non-bank" balances does not allow 
a  separate  data  series  for  balances  with  individuals45,  the  author  argues  that,  at  least  for 
Switzerland  as  a  reporting  country,  the  "non-bank"  group  would  consist  predominantly  of 
households, and even if there would be also companies in that group it would tend to bring 
down the estimated elasticity. 

Previous Savings Directive review 

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

Secondly,  the  share  of  each  of  the  groups  in  the  total  external  non-bank  deposits  from  the 
Member States and the third countries and territories in the network of Savings Agreements 

42 

43 

44 

45 

The  BIS  is  considering  adopting  a  breakdown  among  banks,  other  financial  corporations  and  non 
financial corporations. 
Niels Johannesen ' Tax Evasion and Swiss Bank Deposits', EPRU Working Paper Series, 2010-05, 2010 
http://www.econ.ku.dk/eprn_epru/Workings_Papers/wp-10-05.pdf  
Agreement  between  the  European  Community  and  the  Swiss  Confederation  providing  for  measures 
equivalent  to  those  laid  down  in  Council  Directive  2003/48/EC  on  taxation  of  savings  income  in  the 
form of interest payments, OJ L 385 of 29.12.2004, p. 30. 
It is presumed that only individuals' decisions are affected by the introduction of the Directive and not 
the companies' decisions. 

EN 

27 

   EN 

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

Thirdly,  a  comparison  was  made  between  the  three  groups  with  regard  to  the  share  of  non-
bank  deposits46  in  the  total  of  all  deposits  (i.e.  from  banks  and  non-banks).  This  share  was 
found to be around 35% for groups (ii) and (iii) and around 20% for the Member States that 
exchange  information  (group  (i)).  This,  coupled  with  the  fact  that  the  findings  from  the 
previous paragraph were not matched by similar findings with regard to deposits from banks, 
had  suggested  that  non-bank  depositors  have  a  preference  for  countries  maintaining  some 
form of bank secrecy. 

Limitations of the data 

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

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

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

46 

47 

BIS  definition:  Non-banks  are  all  entities  (including  individuals  but  excluding  official  monetary  authorities)  other  than  those 
defined  as  'banks'.  General  government  and  public  corporations  are  part  of  the  non-bank  sector.  Deposits  should  comprise  all 
claims  reflecting  evidence  of  deposit,  including  non-negotiable  certificates  of  deposit  (CDs)  which  are  not  represented  by 
negotiable securities. 
http://www.snb.ch/en/iabout/stat/statpub/bchpub/stats/bankench  

EN 

28 

   EN 

                                                 
can  reasonably  be  assumed  that  the  non-bank  sector  in  those  jurisdictions  does  not  consist 
primarily of industrial companies or individuals, but of intermediary entities. 

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

Evolution of financial centres – aggregate BIS data 

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

Publicly available data48 allows for a full comparison along the lines of the 2008 review, i.e. 
grouping  counties  into  different  groups  and  observing  the  evolution  of  their  shares  in  non-
bank  positions.  There  is  an  additional  limitation  in  that  the  amounts  compared  are  for 
positions with all counterparties and not only the EU. As mentioned previously, Johannesen 
contrasted  the  evolution  of  deposits  by  EU  non-bank  sector  against  the  non-EU  non-bank 
sector for Switzerland and to a lesser extent for Jersey and Luxemburg. Such differing trends 
would not arise in this comparison, since it is based on the aggregated data for all vis-à-vis 
countries.  For  the  purposes  of  the  review,  countries  have  been  divided  into  the  following 
categories: 

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

Category 

Countries included 

MS info exchange 

MS WHT 

Agr WHT/info exchange 

EU  Member  States 
that 
exchange  information  under 
the Directive 

EU Member States that apply 
a  withholding  tax  under  the 
Directive 

Countries  or 
with a Savings agreements 

jurisdictions 

48 

BIS  Locational  banking  statistics  http://www.bis.org/statistics/bankstats.htm,  Table  3B  External  loans 
and deposits of banks in individual reporting countries, In all currencies vis-à-vis the non-bank sector 
http://www.bis.org/statistics/qcsv/anx3b.csv  

EN 

29 

   EN 

                                                 
RoW onshore 

RoW offshore 

Third countries considered to 
be onshore financial centres 

Third countries considered to 
be offshore financial centres 

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

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

Mar.00

Sep.00

Mar.01

Sep.01

Mar.02

Sep.02

Mar.03

Sep.03

Mar.04

Sep.04

Mar.05

Sep.05

Mar.06

Sep.06

Mar.07

Sep.07

Mar.08

Sep.08

Mar.09

Sep.09

Mar.10

Sep.10

Mar.11

MSs info exchange MSs WHT Agr WHT/info exchange RoW onshore RoW offshore

Figure (1) demonstrates that the shares remain relatively stable at around 43% (2.8% average 
quarterly growth rate) for the Member States that exchange information, and 7% (2% average 
quarterly growth rate) for the Member States that levy a withholding tax49. The share of the 
offshore third countries group50 also remained relatively stable at around 10% (1.95% average 
quarterly  growth  rate).  However,  the  share  of  the  onshore  third  countries  group51  increased 
from 8.85% in 2000 to almost 20% in 2010 (5.02% average quarterly growth rate) mostly at 
the  expense  of  the  third  countries  group  that  are  part  of  the  network  of  savings  agreements 
whose share fell from 27.78% in 2000 to 20.69% in 2011. 

The publicly available BIS data for those countries that did not disclose their bilateral data 
could in addition give an indication of their relevant importance in terms of international 
deposits52 (figure (2)). 

49 
50 

51 

52 

Belgium is considered as a Member State that withholds a tax for the purposes of that comparison. 
Consists  of  Singapore,  Hong  Kong,  Taiwan  (Chinese  Taipei),  Bahrain,  Bahamas,  Panama,  Macao, 
Malaysia  and  Bermuda.  The  balances  for  Singapore  are  comparable  to  those  for  Belgium  and  the 
balances for Hong Kong are comparable to those for France. 
Consists of United States, Japan, Canada, India, Australia, Norway, Turkey, Chile, South Africa, South 
Korea, Brazil and Mexico 
BIS  definition  for  deposits:  institutions  are  asked  to  declare  close  substitutes  for  deposits  in  addition  to  deposits.  It  may  be 
appropriate to also include collective investment schemes (includes hedge funds but excludes pension funds and money market 

EN 

30 

   EN 

 
                                                 
Figure (2): Trends for the major offshore jurisdictions within the network of Savings 
Agreements, based on all foreign non-bank deposits 

1.000.000

900.000

800.000

700.000

600.000

500.000

400.000

300.000

200.000

100.000

0

Mar.00

Sep.00

Mar.01

Sep.01

Mar.02

Sep.02

Mar.03

Sep.03

Mar.04

Sep.04

Mar.05

Sep.05

Mar.06

Sep.06

Mar.07

Sep.07

Mar.08

Sep.08

Mar.09

Sep.09

Mar.10

Sep.10

Mar.11

Cayman Islands

Switzerland

Jersey

Guernsey

Isle of Man

Netherlands Antilles

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

funds), such as mutual funds, money  market funds, in the reporting population if their cross-border activities are considered as 
playing an important role in a country's money creation and money transmission process.  

EN 

31 

   EN 

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

Mar.11

2.000.000

1.800.000

1.600.000

1.400.000

1.200.000

1.000.000

800.000

600.000

400.000

200.000

0

United Kingdom Cayman Islands

United States

Switzerland

Japan

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

Evolution of international deposits of EU residents 

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

53 

The notation in the table represents the country of the bank on the left and the country of the depositor 
on the right, e.g. info-EU->EU means a situation where the bank is in EU Member State exchanging 
information and the depositor is from any EU Member State. 

EN 

32 

   EN 

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

100%

80%

60%

40%

20%

0%

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

info-EU->EU WHT-EU->EU Agr->EU RoW->EU

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

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

The  Proposal  that  resulted  from  the  2008  Report  and  is  currently  under  discussion  in  the 
Council includes an "Indicative list of categories of entities and legal arrangements which are 
considered to be not subject to effective taxation, for the purposes of Article 2(3)". Annex I 
consists  of  a  list  of  jurisdictions  where  the  entities  established  would  be  subject  to  look-
through provisions54. Annex II contains a list of "Entities and legal arrangements whose place 

54 

From those, the following are available as vis-à-vis jurisdictions – Bahamas, Bahrain, Barbados, Belize, 
Bermuda, Brunei, Comoros Islands, Costa Rica, Djibouti, Dominica, Fiji, French Polynesia, Grenada, 
Guatemala,  Hong  Kong  SAR,  Kiribati,  Lebanon,  Liberia,  Macao  SAR,  Malaysia,  Maldives,  Marshall 
Islands,  Mauritius,  Micronesia,  Nauru,  New  Caledonia,  New  Zealand,  Palau,  Panama,  Philippines, 
Samoa, Sao Tome and Principe, Seychelles, Singapore, Solomon Islands, South Africa, Tonga, Tuvalu 
(formerly the Ellice Islands), United Arab Emirates, Uruguay, Vanuatu 

EN 

33 

   EN 

 
                                                 
of  establishment  or  place  of  effective  management  is  in  a  country  or  jurisdiction  listed  in 
Article  17(2),  to  which  Article  2(3)  applies  pending  the  adoption  by  the  country  or 
jurisdiction concerned of provisions equivalent to those of Article 4(2)"55. 

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

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

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

EUSD -> EU EUSD -> Annex I EUSD -> Annex II

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

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

55 

From  those,  the  following  are  available  as  vis-a-vis  jurisdictions  –  Andorra,  Aruba,  Cayman  Islands, 
Guernsey, Isle of Man, Jersey, Liechtenstein, Netherlands Antilles, San Marino, Switzerland, Turks and 
Caicos and West Indies UK (i.e. Anguilla, Antigua and Barbuda, British Virgin Islands, Montserrat and 
St. Christopher/St. Kitts – Nevis) 

EN 

34 

   EN 

 
 
 
                                                 
Figure (6) Share of non-bank deposits 
of BIS reporting countries category per 
amending Proposal annex I 

Figure (7) Amount (million USD) of non-bank  
deposits of BIS reporting countries category per  
amending Proposal annex I  

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

400000

350000

300000

250000

200000

150000

100000

50000

0

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

info-EU->Annex I WHT-EU->Annex I Agr->Annex I

info-EU->Annex I WHT-EU->Annex I Agr->Annex I

The comparatively large share (44% on average) of the third group (iii) jurisdictions from the 
Savings Agreements network in the deposits of the non-bank sector from the jurisdictions in 
Annex I (figure 6) and the fact that the balances of the three groups with the jurisdictions in 
Annex I have also (figure 7) nearly doubled from 2002 until 200756 is an indication that the 
implementation  of  the  look-through  provisions  for  entities  in  Annex  I  is  well  justified  and 
necessary not only in the context of the amendments to the Directive but also for updating the 
Savings Agreements. 

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

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

56 

The share rebounded slightly by a 1 percentage point for the following three years. 

EN 

35 

   EN 

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

100%

80%

60%

40%

20%

0%

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Agr->EU Agr->Annex I Agr->Annex II

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

In order to identify individual jurisdictions from Annex II as the jurisdiction of the non-bank 
depositor,  the  analysis  must  rely  solely  on  publicly  available  BIS  data57  even  though  the 
information is aggregate. To put their vis-à-vis balances in perspective, it is useful to have a 
look  at  the  first  10  countries  ranked  by  the  amount  of  non-bank  deposits  by  investors  from 
those countries. 

57 

BIS  Locational  banking  statistics  http://www.bis.org/statistics/bankstats.htm,  Table  7B  External  loans 
and  deposits  of  reporting  banks  vis-à-vis  individual  countries,  Vis-à-vis  the  non-bank  sector 
http://www.bis.org/statistics/qcsv/anx7b.csv  

EN 

36 

   EN 

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

100%

80%

60%

40%

20%

0%

France
Ireland
West Indies UK
Luxembourg
Switzerland
Netherlands
Germany
Cayman Islands
United Kingdom
United States

Mar.00

Dec.00

Sep.01

Jun.02

Mar.03

Dec.03

Sep.04

Jun.05

Mar.06

Dec.06

Sep.07

Jun.08

Mar.09

Dec.09

Sep.10

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

Evolution of international EU deposits vs non-EU deposits 

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

58 

For BIS purposes that includes Anguilla, Antigua and Barbuda, British Virgin Islands, Montserrat and 
St. Christopher/St. Kitts – Nevis 

EN 

37 

   EN 

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

2000000

1800000

1600000

1400000

1200000

1000000

800000

600000

400000

200000

0

all->EU
all->RoW

Sum
of
mars-
02

Sum
of
juin-
02

Sum
of
sept-
02

Sum
of
déc-
02

Sum
of
mars-
03

Sum
of
juin-
03

Sum
of
sept-
03

Sum
of
déc-
03

Sum
of
mars-
04

Sum
of
juin-
04

Sum
of
sept-
04

Sum
of
déc-
04

Sum
of
mars-
05

Sum
of
juin-
05

Sum
of
sept-
05

Sum
of
déc-
05

Sum
of
mars-
06

Sum
of
juin-
06

Sum
of
sept-
06

Sum
of
déc-
06

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

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

The United Kingdom 

France 

1000000

900000

800000

700000

600000

500000

400000

300000

200000

100000

0

UK->EU
UK->RoW

90000

80000

70000

60000

50000

40000

30000

20000

10000

0

Sum of mars-05
Sum of mars-06
Sum of mars-03
Sum of mars-02
Sum of mars-04
Sum of sept-06
Sum of déc-05
Sum of sept-02
Sum of déc-06
Sum of déc-02
Sum of sept-05
Sum of sept-03
Sum of sept-04
Sum of déc-03
Sum of déc-04
Sum of juin-06
Sum of juin-02
Sum of juin-03
Sum of juin-04
Sum of juin-05

Sum of mars-04
Sum of mars-03
Sum of mars-02
Sum of mars-05
Sum of mars-06
Sum of sept-02
Sum of sept-03
Sum of déc-02
Sum of sept-04
Sum of déc-03
Sum of sept-06
Sum of déc-04
Sum of sept-05
Sum of déc-06
Sum of déc-05
Sum of juin-02
Sum of juin-06
Sum of juin-03
Sum of juin-05
Sum of juin-04

FR->EU
FR->RoW

EN 

38 

   EN 

 
 
 
Figure (13) 

Switzerland59 

400000

350000

300000

250000

200000

150000

100000

50000

0

Sum of juin-06
Sum of juin-04
Sum of juin-02
Sum of juin-05
Sum of juin-03
Sum of sept-05
Sum of sept-03
Sum of sept-04
Sum of sept-06
Sum of sept-02
Sum of déc-05
Sum of mars-06
Sum of déc-03
Sum of mars-04
Sum of mars-05
Sum of déc-04
Sum of mars-02
Sum of mars-03
Sum of déc-06
Sum of déc-02

CH->EU
CH->RoW

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

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

Germany  

Netherlands 

250000

200000

150000

100000

50000

0

DE->EU
DE->RoW

140000

120000

100000

80000

60000

40000

20000

0

Sum of mars-06
Sum of mars-04
Sum of mars-02
Sum of mars-03
Sum of mars-05
Sum of déc-06
Sum of déc-05
Sum of déc-04
Sum of déc-03
Sum of déc-02
Sum of sept-05
Sum of sept-06
Sum of sept-04
Sum of sept-03
Sum of sept-02
Sum of juin-03
Sum of juin-02
Sum of juin-06
Sum of juin-04
Sum of juin-05

Sum of mars-06
Sum of mars-04
Sum of mars-03
Sum of mars-05
Sum of mars-02
Sum of déc-05
Sum of sept-06
Sum of déc-06
Sum of sept-05
Sum of sept-04
Sum of déc-04
Sum of sept-03
Sum of déc-03
Sum of sept-02
Sum of déc-02
Sum of juin-06
Sum of juin-05
Sum of juin-04
Sum of juin-03
Sum of juin-02

NL->EU
NL->RoW

59 

It  must  be  noted  that  Swiss-source  interest  income  is  currently  outside  the  scope  of  the  EU-Swiss 
Agreement.  The  Commission  has  obtained  from  BIS  a  separate  data  set  only  for  fiduciary  business, 
which are not considered Swiss-source income, but are subject to the EU-Swiss Agreement. The effect 
using  the  separate  data  set  for  fiduciary  business  produces  comparable  results  that  are  even  more 
pronounced. 

EN 

39 

   EN 

 
 
 
 
 
 
 
                                                 
Figure (16) 

Luxemburg 

160000

140000

120000

100000

80000

60000

40000

20000

0

LU->EU
LU->RoW

Sum of juin-06
Sum of juin-05
Sum of juin-04
Sum of juin-03
Sum of juin-02
Sum of mars-06
Sum of mars-05
Sum of mars-04
Sum of mars-03
Sum of mars-02
Sum of sept-03
Sum of sept-02
Sum of sept-06
Sum of sept-04
Sum of sept-05
Sum of déc-04
Sum of déc-03
Sum of déc-02
Sum of déc-05
Sum of déc-06

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

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

Austria60 

35000

30000

25000

20000

15000

10000

5000

0

Sum of juin-06
Sum of juin-02
Sum of juin-03
Sum of juin-04
Sum of juin-05
Sum of mars-02
Sum of mars-03
Sum of mars-04
Sum of mars-05
Sum of mars-06
Sum of sept-06
Sum of sept-02
Sum of sept-03
Sum of sept-04
Sum of sept-05
Sum of déc-06
Sum of déc-02
Sum of déc-03
Sum of déc-04
Sum of déc-05

Ireland 

180000

160000

140000

120000

100000

80000

60000

40000

20000

0

AT->EU
AT->RoW

Sum of mars-03
Sum of mars-05
Sum of mars-02
Sum of mars-04
Sum of mars-06
Sum of déc-04
Sum of sept-03
Sum of déc-03
Sum of déc-02
Sum of déc-05
Sum of sept-04
Sum of sept-06
Sum of déc-06
Sum of sept-02
Sum of sept-05
Sum of juin-04
Sum of juin-05
Sum of juin-02
Sum of juin-03
Sum of juin-06

IE->EU
IE->RoW

60 

There was change in reporting (more reporting banks, etc) with a break-in-series of about $112 billion 
for  international  claims  and  about  $133  billion  for  international  liabilities.  Please  see  more  details  at 
http://www.bis.org/statistics/breakstables17.pdf  

EN 

40 

   EN 

 
 
 
 
                                                 
Figure (19) 

Belgium 

160000

140000

120000

100000

80000

60000

40000

20000

0

BE->EU
BE->RoW

Sum of juin-03
Sum of juin-02
Sum of juin-04
Sum of juin-05
Sum of juin-06
Sum of mars-04
Sum of mars-06
Sum of mars-05
Sum of mars-02
Sum of mars-03
Sum of déc-02
Sum of déc-05
Sum of déc-03
Sum of déc-06
Sum of déc-04
Sum of sept-06
Sum of sept-02
Sum of sept-05
Sum of sept-03
Sum of sept-04

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

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

Conclusion 

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

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

3.2. 

Euro-area deposits – ECB MFI61 statistics 

Description 

The data provided by the ECB is based on MFI balance sheet statistics. It comprises monthly 
balances of deposits into monetary financial institutions in each of the Member States placed 
by  non-residents  from  the  euro-area,  i.e.  the  balances  are  aggregated  at  euro-area  depositor 

61 

REGULATION (EC) No 2423/2001 OF THE EUROPEAN CENTRAL BANK of 22 November 2001 
concerning the consolidated balance sheet of the monetary financial institutions sector (ECB/2001/13) 

EN 

41 

   EN 

 
                                                 
level without a detailed split among individual euro-area Member States. The data are split by 
the  sector  of  the  depositor,  including  a  detailed  split  for  households.  The  data  are  also  split 
into  seven  different  maturities,  i.e.  (1)  Overnight  deposits24,  (2)  Deposits  with  an  agreed 
maturity  up  to  1  year,  (3)  Deposits  with  an  agreed  maturity  over  1  and  up  to  2  years,  (4) 
Deposits  with  an  agreed  maturity  over  2  years,  (5)  Deposits  redeemable  at  notice  up  to  3 
months, (6) Deposits redeemable at notice over 3 months, (7) Repurchase agreements. 

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

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

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

From the definition of bank deposits it transpires that those would normally be classified as 
debt claims62 and the income thereof would fall within the scope of Art. 6(1) (a) together with 
income from other debt claims from debt securities. 

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

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

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

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

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

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

(iv) Level of reporting: Since the product covered is bank deposits, it is reasonable to expect 
that the bank/debtor is the paying agent and the household depositor/creditor is the beneficial 

62 

As  became  evident  from  the  ad-hoc  report  on  the  application  of  the  Savings  Directive,  there  are 
different interpretations as to whether repurchase agreements should be considered as debt claims. 

EN 

42 

   EN 

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

No consolidation for statistical purposes is permitted across national boundaries.  

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

Limitations of the data 

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

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

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

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

As  a  second  step,  the  monthly  data  on  the  deposits  were  matched  with  the  corresponding 
interest rates, also available on a monthly basis from the ECB63 and broken down according to 
the aforementioned maturities. Where those were not available, reasonable estimations were 
made,  with  the  preference  for  an  underestimation  of  the  particular  interest  rate  where 
necessary  in  order  to  provide  the  best-case  scenario  in  terms  of  the  reflection  of  the 
underlying tax base. Since the MFI data reflects stocks and not flows, the interest rates on the 

63 

http://sdw.ecb.europa.eu/browse.do?node=9484269  

EN 

43 

   EN 

                                                 
outstanding amounts are preferred and sometimes substituted for similar maturities64. In some 
cases  a  sensitivity  analysis  was  performed  with  the  most  favourable  reference  rates  (even 
0%).  It  must  be  noted  that  the  rates  used  are  those  that  apply  to  both  residents  and  non-
residents  in  the  euro-area  Member  States,  but  it  is  reasonable  to  assume  the  same  level  of 
deposit  interest  rates  apply  to  both  residents  and  non-residents  in  the  euro-area  Member 
States.  From  the  matching  of  the  monthly  balances  per  maturity  with  the  relevant  interest 
rates an annual average of the underlying tax base was derived. 

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

Simplified illustrative example:  

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

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

64 

65 
66 

67 

This is especially the case for "Deposits with agreed maturity, Up to 1 year", where the "Outstanding 
amount" interest rate for "Deposits with agreed maturity, Up to 2 years" was used instead of the "New 
business" interest rate for "Deposits with agreed maturity, Up to 1 year". This was done due to the very 
high correlation between the "New business" interest rate for "Deposits with agreed maturity, Up to 1 
year" and the "New business" interest rate for "Deposits with agreed maturity, Up to 2 years". 
That was possible for BG, CY, DK, EE (for 2008 and 2009), ES, HU, LT, MT, NL, PL, SI and the UK. 
Those Member States are CZ, DE, EL, FI, FR, IE, IT, LT, LU (for the voluntary disclosure), PT, RO, 
SE and SK 
The 70% benchmark is considered sufficiently low to avoid any temporal differences and other effects 
outlined in the methodology section. 

EN 

44 

   EN 

                                                 
In addition, it must be noted that this method gives some bias towards better % coverage for 
the  withholding  Member  States,  because  the  withholding  tax  figures  reflect  not  only  the 
classical interest income under Art. 8(2)(a) or "total amount of interest or income“ under the 
last  sub-paragraph  of  Art.  8(2),  but  also  sales  proceeds  from  both  debt  instruments  and 
units/shares  in  UCITS.  The  bias  would  be  strongest  for  those  Member  States  whose  paying 
agents deal extensively with cross-border UCITS68. 

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

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

BG 

CY 

DK 

ES 

HU 

LT 

LV 

2006 

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

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

75,45%

2008  58,08%  44,47% 

40,31% 82,00% 143,08% 49,92% 

93,57%

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

60,57%

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

85,08%

MT 

NL 

PL 

SI 

UK69 

2006 

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

2007 

56,47%  143,08%  165,91%

69,90% 25,21%

2008 

56,21%  134,45% 

67,68%

90,65% 9,23%

2009  120,66%  124,44% 

72,89% 1478,97% 9,07%

Average 

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

68 
69 

For a description of the developments in the UCITS markets of Member States, see Section 3.6 
The  sensitivity  analysis  for  the  UK  if  0%  is  used  for  overnight  deposits  and  repurchase  agreements 
gives the following % coverage for the years 2006 – 18,81%; 2007 – 64,73%; 2008 – 22,16%; 2009 – 
15,35%.  

EN 

45 

   EN 

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

CZ 

DE 

EE70 

EL 

FI71 

FR 

IE 

2006  1133,01%  112,82% 

0,00% 285,68% 9624,82%  61,70%  266,64%

2007 

825,46% 

72,19% 

0,00% 166,63% 167,10%  58,39%  358,28%

2008 

578,29% 

73,19% 

62,35% 129,48%

56,54%  53,90%  574,72%

2009 

489,47%  154,90%  103,01% 100,39%

88,02%  64,28% 

71,68%

Average 

756,56%  103,27% 

82,68% 170,55% 2484,12%  59,57%  317,83%

IT 

LU72 

PT 

RO 

SE73 

SK 

2006  1515,05%  49,58% 

1,59% 0,00%

713,80% 472,95% 

2007  1083,70%  44,56% 

6,74% 37,21%

711,71% 72,81% 

2008 

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

2009 

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

Average 

959,10%  39,08%  27,35% 36,17% 4733,12% 231,81% 

Table  (8)  Coverage  of  withholding  tax  levied  as  a  %  of  notional  withholding  tax  per  ECB 
cross-border deposit:  

AT 

BE 

LU 

2006  245,04% 158,89%  253,01%

2007  204,66% 133,33% 

213%

2008  151,93% 112,66%  173,33%

2009 

298,36%

Average  200,54% 134,96%  234,40%

70 
71 
72 

73 

The ECB data series for EE start from 2008. 
The average for FI without the 2006 figures is 103,89% 
The figure for LU reflects only the % coverage of the underlying tax base by the voluntarily exchanged 
information. 
Sweden  does  not  provide  a  summary  of  exchanged  data.  The  calculations  are  based  on  reports  on 
received data by other Member States. 

EN 

46 

   EN 

 
 
 
 
 
 
 
                                                 
The method for this analysis was discussed in the ACDT meeting on 28 September 2011. The 
estimations are based on the latest updates received from Member States after that meeting. It 
is hoped that Member States will be able to use this data source in future in order to verify the 
completeness  of  the  records  they  exchange  under  the  Directive.  From  the  estimations  it 
transpires that three Member States (UK, PT and RO) fall significantly and consistently below 
the 70% benchmark. In addition, there are 4 Member States that show results that are below 
the 70% benchmark. 

Evolution of non-resident euro-area household deposits 

The  MFI  statistics  allow  an  analysis  of  the  dynamics  of  non-resident  euro-area  household 
deposits  for  all  Member  States.  Deposits  from  all  maturities,  including  overnight  deposits 
typically  producing  low  interest,  start  at  over  EUR  164  billion  in  2003  and  peaked  at  over 
EUR 247 billion in October 2008 (a 50% increase for the period). The figures below outline 
the evolution by groups of Member States. Deposits with agreed maturity are first compared 
with  deposits  with  no  agreed  maturity  (Fig.  20),  assuming  that  the  deposits  with  agreed 
maturity produce relatively higher interest income and are therefore more sensitive to the tax 
treatment thereof. The deposits with agreed maturity have decreased from EUR 72 billion in 
January  2003  to  EUR  60  billion  in  November  2005  –  15%  for  the  period  and  a  monthly 
decrease of -0.52%. This is not replicated by the deposits with any agreed maturity. 

Figure  (20)  Trends  of  cross-border  deposits  with  agreed  maturity  and  deposits  with  no 
agreed maturity aggregated for all MS 

Deposits with maturity vs deposits with no agreed maturity

200000

180000

160000

140000

120000

100000

80000

60000

40000

20000

0

3
0
0
2
.
n
a
J

3
0
0
2
.
y
a
M

3
0
0
2
.
p
e
S

4
0
0
2
.
n
a
J

4
0
0
2
.
y
a
M

4
0
0
2
.
p
e
S

5
0
0
2
.
n
a
J

5
0
0
2
.
y
a
M

5
0
0
2
.
p
e
S

6
0
0
2
.
n
a
J

6
0
0
2
.
y
a
M

6
0
0
2
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p
e
S

7
0
0
2
.
n
a
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7
0
0
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y
a
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7
0
0
2
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p
e
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8
0
0
2
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n
a
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8
0
0
2
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y
a
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8
0
0
2
.
p
e
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9
0
0
2
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n
a
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9
0
0
2
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y
a
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9
0
0
2
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p
e
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0
1
0
2
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n
a
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0
1
0
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y
a
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0
1
0
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p
e
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1
1
0
2
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n
a
J

1
1
0
2
.
y
a
M

All MS Agreed Maturity Aggregated

All MS no agreed maturityAggregated

A finer distinction between the trends for deposits with agreed maturity in euro-area Member 
States and non-euro area Member States reveal that the downward trend until November 2005 
came  primarily  from  euro-area  Member  States  (-38.84%  for  the  period  and  a  monthly 
decrease  of  -1.51%).  During  the  following  three  years  from  November  2005  to  November 
2008 the two categories show an almost perfectly matched increase in cross-border deposits 

EN 

47 

   EN 

 
from EUR 60 billion to EUR 81 billion (an increase of 25% for the euro-area and 30% for the 
non-euro area respectively). 

After  the  end  of  2008,  deposits  with  agreed  maturity  in  euro  area  Member  States  appear  to 
have  suffered  the  strongest  decrease  (from  EUR  41  billion  in  November  2008  to  EUR  21 
billion in March 2010), primarily due to the financial crisis. 

Figure (21) Trends of cross-border deposits with agreed maturity in euro area and non-euro 
area Member States 

EUR vs nonEUR agreed maturity

60000

50000

40000

30000

20000

10000

0

3
0
0
2
.
n
a
J

3
0
0
2
.
y
a
M

3
0
0
2
.
p
e
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4
0
0
2
.
n
a
J

4
0
0
2
.
y
a
M

4
0
0
2
.
p
e
S

5
0
0
2
.
n
a
J

5
0
0
2
.
y
a
M

5
0
0
2
.
p
e
S

6
0
0
2
.
n
a
J

6
0
0
2
.
y
a
M

6
0
0
2
.
p
e
S

7
0
0
2
.
n
a
J

7
0
0
2
.
y
a
M

7
0
0
2
.
p
e
S

8
0
0
2
.
n
a
J

8
0
0
2
.
y
a
M

8
0
0
2
.
p
e
S

9
0
0
2
.
n
a
J

9
0
0
2
.
y
a
M

9
0
0
2
.
p
e
S

0
1
0
2
.
n
a
J

0
1
0
2
.
y
a
M

0
1
0
2
.
p
e
S

1
1
0
2
.
n
a
J

1
1
0
2
.
y
a
M

Euro Area

non-euro area

Looking into individual Member States, for several Member States (LU, ES, FR, DE, BE, PT, 
NL and IT) there was a marked decrease of household deposits from 2003 until mid-2006 – 
the  total  amounts  for  those  Member  States  were  almost  halved  during  that  period.  The 
estimated average monthly decrease is -1.7% per month. 

For  three  Member  States  (UK,  IE  and  DK)  there  was  an  average  61.54%  increase  of 
household deposits for the same period (average monthly increase of 1.3% per month).  

Figures 22-23 below show the evolution of euro-area cross-border household depositors in the 
Member State where the deposit is held. 

Figure (22)………………………………………………Figure (23) 

45000

40000

35000

30000

25000

20000

15000

10000

5000

0

EN 

3
0
0
2
.
n
a
J

3
0
0
2
.
y
a
M

3
0
0
2
.
p
e
S

4
0
0
2
.
n
a
J

4
0
0
2
.
y
a
M

4
0
0
2
.
p
e
S

5
0
0
2
.
n
a
J

5
0
0
2
.
y
a
M

5
0
0
2
.
p
e
S

6
0
0
2
.
n
a
J

6
0
0
2
.
y
a
M

6
0
0
2
.
p
e
S

7
0
0
2
.
n
a
J

7
0
0
2
.
y
a
M

7
0
0
2
.
p
e
S

8
0
0
2
.
n
a
J

8
0
0
2
.
y
a
M

8
0
0
2
.
p
e
S

9
0
0
2
.
n
a
J

9
0
0
2
.
y
a
M

9
0
0
2
.
p
e
S

0
1
0
2
.
n
a
J

0
1
0
2
.
y
a
M

0
1
0
2
.
p
e
S

1
1
0
2
.
n
a
J

1
1
0
2
.
y
a
M

LU
UK

8000

7000

6000

5000

4000

3000

2000

1000

0

48 

3
0
0
2
.
n
a
J

3
0
0
2
.
y
a
M

3
0
0
2
.
p
e
S

4
0
0
2
.
n
a
J

4
0
0
2
.
y
a
M

4
0
0
2
.
p
e
S

5
0
0
2
.
n
a
J

5
0
0
2
.
y
a
M

5
0
0
2
.
p
e
S

6
0
0
2
.
n
a
J

6
0
0
2
.
y
a
M

6
0
0
2
.
p
e
S

7
0
0
2
.
n
a
J

7
0
0
2
.
y
a
M

7
0
0
2
.
p
e
S

8
0
0
2
.
n
a
J

8
0
0
2
.
y
a
M

8
0
0
2
.
p
e
S

9
0
0
2
.
n
a
J

9
0
0
2
.
y
a
M

9
0
0
2
.
p
e
S

0
1
0
2
.
n
a
J

0
1
0
2
.
y
a
M

0
1
0
2
.
p
e
S

1
1
0
2
.
n
a
J

1
1
0
2
.
y
a
M

BE
DE
ES
FR
AT
PT
CY

   EN 

 
 
From  the  Member  States  with  the  highest  amount  of  cross-border  depositing  by  euro-area 
households,  there  is  a  decrease  in  Luxemburg  and  an  increase  in  the  United  Kingdom.  The 
other  group  of  Member  States  show  a  general  decrease  of  cross-border  depositing  by  euro-
area households74. 

Evolution of household vs. company deposits 

If  the  MFI  statistics75  for  the  non-financial  companies  sector  are  compared  to  those  for  the 
household  sector,  this  could  highlight  any  shifts  of  investor  preferences  towards  investing 
directly  or  through  an  intermediary  company  (figures  (25)-(26)).  The  shares  of  each  of  the 
two  sectors  would  give  a  practical  estimation  of  the  described  effect.  Out  of  all  Member 
States,  a  decrease  of  the  share  of  households  for  the  benefit  of  non-financial  companies  is 
observed  for  France  (average  monthly  decrease  0.82%),  Spain  (average  monthly  decrease 
0.78%), and for Luxemburg (average monthly decrease 0.71%). 

Figures 24-26 show the evolution of household sector compared to the non-financial company 
sector for non-bank deposits in specific Member States. 

…Figure (24)………………………………………… Figure (25) 

100%

80%

60%

40%

20%

0%

Jan.2003

Apr.2003

Jan.2004
Jul.2003
Oct.2003

Apr.2004

Jul.2004
Jan.2005
Apr.2005
Oct.2004

Jan.2006
Jul.2005
Oct.2005

Apr.2006

Jul.2006
Jan.2007
Oct.2006

Apr.2007

Apr.2008
Jul.2007
Jan.2008
Oct.2007

Jan.2009
Jul.2008
Oct.2008

Apr.2009

Jul.2009
Jan.2010
Oct.2009

Apr.2010

Jan.2011
Jul.2010
Oct.2010

Apr.2011

…Figure (26) 

100%

80%

60%

40%

20%

0%

Apr.2003
Jan.2003

Apr.2004
Jan.2004
Oct.2003
Jul.2003

Apr.2005
Jul.2004
Oct.2004
Jan.2005

Oct.2005
Jul.2005
Jan.2006

Apr.2006

Apr.2007
Jan.2007
Oct.2006
Jul.2006

Apr.2008
Jan.2008
Oct.2007
Jul.2007

Apr.2009
Jan.2009
Oct.2008
Jul.2008

Apr.2010
Oct.2009
Jan.2010
Jul.2009

Jul.2010
Oct.2010
Jan.2011

Apr.2011

100%

80%

60%

40%

20%

0%

FR-NFC
FR-HH

Jan.2003
Apr.2003

Oct.2003
Jan.2004
Jul.2003

Apr.2004

Oct.2004
Jan.2005
Jul.2004

Apr.2005

Jan.2006
Oct.2005
Apr.2006
Jul.2005

Oct.2006
Jan.2007
Jul.2006
Apr.2007

Oct.2007
Jul.2007
Jan.2008

Apr.2008

Jan.2009
Oct.2008
Jul.2008
Apr.2009

Oct.2009
Jul.2009
Apr.2010
Jan.2010

Oct.2010
Jul.2010
Jan.2011

Apr.2011

ES-NFC
ES-HH

LU-NFC
LU-HH

74 

75 

The significant decrease for France and Spain in mid 2005 is due to a change in classification (and not a 
genuine change to the deposit base) of a significant amount of deposits from "agreed maturity below 1 
year" to "overnight deposits" 
Again,  deposits  with  agreed  maturity  are  only  compared,  assuming  that  the  deposits  with  agreed 
maturity produce relatively higher interest income and are therefore more sensitive to the tax treatment 
thereof. When the results are replicated including also deposits redeemable at notice up to 3 months, the 
decreasing share (average monthly decrease 2.3%) of the household sector investing in the Netherlands 
can also be observed. 

EN 

49 

   EN 

 
 
                                                 
Conclusion 

Overall,  in  several  Member  States  there  has  been  a  decrease  in  cross-border  savings  in 
deposits  with  agreed  maturities  by  euro-area  households  around  the  time  of  the  entry  into 
force of the Directive both as an absolute amount and as a share of households in the total of 
non-financial depositors. Nevertheless, that trend appears to have started already in 2003 and 
is not matched by the trends for overnight deposits and deposits redeemable at notice. 

3.3. 

Switzerland – data from the Swiss National Bank (SNB) 

Description 

The Swiss National Bank (SNB) issues an annual publication "Banks in Switzerland"76 with 
very  detailed  statistics  based  on  the  financial  reports  of  Swiss  banks.  The  2010  publication 
covers a total of 320 Swiss banks and local branches of foreign banks from various banking 
sectors. The banks and their balance sheet totals are listed in the publication. The figures are 
provided in CHF millions (the figures for custody accounts are in CHF billions) and the 2010 
publication contains data series for the period 2002-2010. 

The level of consolidation of the reporting entity is mostly "parent company" which includes 
all  domestic  offices  as  well  as  foreign  branches  of  the  same  legal  entity.  Nevertheless,  the 
statistics on securities holdings in custody accounts are reported only at the level of domestic 
offices. 

Most  importantly,  the  publication  provides  some  very  detailed  geographical  and/or  client 
breakdowns for the following: 

• 

• 

• 

76 
77 
78 
79 
80 
81 
82 
83 
84 
85 
86 

Table  32  "Geographical  breakdown  of  assets  and  liabilities  shown  in  the  balance 
sheet"77 provides a geographical breakdown of a set of assets and liabilities and most 
importantly "Liabilities towards customers in the form of savings and deposits"78 

Table 38 "Fiduciary business, by country"79 provides the 2002-2010 time series for 
fiduciary assets80 and liabilities81  

Table 38c "Holdings of securities in bank custody accounts, by domicile of custody 
account  holder,  category  of  security  and  business  sector"82  provides  the  2002-2010 
time  series  for  custody  accounts  distinguishing  between  resident  and  non-resident, 
private,  commercial  or  institutional  custody  account  holder  for  bonds83,  shares84, 
units in collective investment schemes85 and other securities86. 

http://www.snb.ch/en/iabout/stat/statpub/bchpub/stats/bankench  
http://www.snb.ch/ext/stats/bankench/pdf/deen/Stat32.pdf  
http://www.snb.ch/ext/stats/bankench/xls/en/bankench_bLaender_D32_M8.xls  
http://www.snb.ch/ext/stats/bankench/pdf/deen/Stat38.pdf  
http://www.snb.ch/ext/stats/bankench/xls/en/bankench_bTreuGesch_D38_M1.xls  
http://www.snb.ch/ext/stats/bankench/xls/en/bankench_bTreuGesch_D38_M2.xls  
http://www.snb.ch/ext/stats/bankench/pdf/deen/Stat38c.pdf  
http://www.snb.ch/ext/stats/bankench/xls/en/bankench_bWertDepots_D38c_M2.xls  
http://www.snb.ch/ext/stats/bankench/xls/en/bankench_bWertDepots_D38c_M4.xls  
http://www.snb.ch/ext/stats/bankench/xls/en/bankench_bWertDepots_D38c_M5.xls  
http://www.snb.ch/ext/stats/bankench/xls/en/bankench_bWertDepots_D38c_M6.xls  

EN 

50 

   EN 

                                                 
Studies that use the data 

The  SNB  data  was  used  in  the  study  "The  Missing  Wealth  of  Nations:  Are  Europe  and  the 
U.S. net Debtors or net Creditors?"87 by Gabriel Zucman to supplement IMF data on portfolio 
investment and argue that if tax havens were taken into account then the euro-area would turn 
into a net creditor. 

Limitations of the data 

There are certain misalignments between the data and the Directive's scope. Firstly, only in 
the case of Table 38c is there a breakdown between private customers and other sectors. For 
the  other  statistics  the  data  is  available  for  the  aggregate  "customers"  group,  which 
nevertheless allows the explicit (for table 32) or implicit (for the "liabilities" part of Table 38) 
exclusion  of  other  banks  as  customers.  Secondly,  the  reporting  in  Banks  in  Switzerland  is 
consolidated  at  the  level  of  the  parent  company  and  therefore  also  includes  balances  at  the 
level  of  foreign  branches  of  a  Swiss  bank.  Those  foreign  branches,  if  situated  in  the  EU, 
would normally be considered paying agents in the Member State of their establishment and 
not a Swiss paying agent. It must be noted that the statistics in Table 38c are reported only at 
the level of the domestic offices and do not suffer from that limitation. 

Liabilities towards customers in the form of savings and deposits 

This data enables a comparison based on the split by country of the customer. It is assumed 
that  those  savings  and  deposits  are  considered  as  Swiss  source  income  for  the  purposes  of 
levying the anticipatory tax on Swiss source interest payments. Therefore, it is unlikely that 
the income produced by these liabilities would fall within the scope of the retention defined in 
article 1(1) of the current EU-Swiss Savings Agreement88. 

The  largest  savings  and  deposits  are  held  by  customers  from  Germany,  France,  Italy,  the 
United Kingdom, Austria and Spain from the EU and the United States. The second group of 
countries includes Greece, the Netherlands, Belgium and Sweden from the EU, Canada, Israel 
and  Russia  from  the  third  countries  and  Panama  and  Singapore  as  offshore  jurisdictions. 
Panama  and  Singapore  showed  a  remarkable  increase  from  2007  to  2010  with  an  average 
annual  increase  of  167%  for  Panama  and  45%  for  Singapore89.  Another  important  offshore 
centre,  the  West  Indies  UK  (collectively)90,  which  is  not  shown  in  the  figures  because  of 
lower absolute amount of the balances, showed an average annual increase of 252% over the 
2007-2010 period. For comparison, the deposits from German clients have increased by 22% 
over that period. 

87 

88 

89 

90 

http://www.parisschoolofeconomics.eu/docs/zucman-gabriel/mwn27july.pdf, 
http://www.parisschoolofeconomics.eu/docs/zucman-gabriel/appendix26july.pdf 
http://www.parisschoolofeconomics.eu/docs/zucman-gabriel/maintablesfigures.xlsx, 
http://www.parisschoolofeconomics.eu/docs/zucman-gabriel/appendix.xlsx  
As of footnote 44 above.Art. 1(2) of the agreement stipulates: "Interest payments made on debt-claims 
issued by debtors who are residents of Switzerland or pertaining to permanent establishments of non-
residents located in Switzerland shall be excluded from the retention." 
Again, it can be safely assumed that the non-bank sector in those jurisdictions does not consist primarily 
of industrial companies or individuals, but of intermediary entities. 
i.e. including Anguilla, Antigua and Barbuda, British Virgin Islands, Montserrat and St. Christopher/St. 
Kitts – Nevis 

appendix 
sheets 

data 
and 

data 

EN 

51 

   EN 

                                                 
Figures (27) and (28) show the evolution of savings and deposits per country of depositor in 
Swiss banks (amounts CHF millions) 

Figure (27)…………………………………………………………Figure (28) 

20000

18000

16000

14000

12000

10000

8000

6000

4000

2000

0

3000

2500

United States

2000

Spain

Austria

United Kingdom

1500

Italy

France

Germany

1000

500

0

Singapore

Russia

Israel

Panama

Sweden

Belgium

Netherlands

Canada

Greece

2002 2003 2004 2005 2006 2007 2008 2009 2010

2002

2003

2004

2005

2006

2007

2008

2009

2010

Foreign  savings  and  deposits  appear  to  have  recovered  in  the  last  two  years  from  the 
slowdown in 2007 and 2008. 

Fiduciary business 

The definition of fiduciary business for the purposes of the "Banks in Switzerland" report can 
only be found in the 1997 edition of the publication, which is not available in English. 

"Les opérations fiduciaires englobent les  placements, crédits et participations que la banque 
effectue ou accorde en son propre nom, mais pour le compte et aux risques exclusifs du client, 
sur la base d'un ordre écrit. Le mandant supporte le risque de change, de transfert, de cours et 
de recouvrement et il lui revient la totalité du rendement de l'opération; la banque ne perçoit 
qu'une  commission.  Les  fonds  que  les  banques  reçoivent  à  titre  fiduciaire  proviennent  en 
majeure  partie  de  l'étranger  et  sont  placés  presque  exclusivement  à  l'étranger.  Il  s'agit 
essentiellement de placements à court terme à l'étranger, dans des banques tierces ou dans les 
propres  comptoirs  juridiquement  dépendants  des  banques  suisses.  Dans  ce  dernier  cas,  les 
opérations  doivent  figurer  dans  le  bilan,  étant  donné  qu'il  en  résulte  un  engagement  du 
comptoir envers le siège en Suisse."91 

From the definition it is clear that fiduciary business consists primarily of deposits from non-
residents that are afterwards re-deposited abroad in the name of the bank, but for the account 
of the depositor. The re-depositing may be done into a third-party bank, or with branches of 
the Swiss bank abroad. Since the Swiss bank is acting in its own name, the bank where the re-
depositing takes place would not be aware that the re-deposited funds belong to the original 

91 

Unofficial translation: "Fiduciary transactions include investments, loans and equity interests which the 
bank holds or grants in its own name, but for the account and at the risk of the customer, on the basis of 
a written agreement. The instructing customer bears the full currency, transfer, price and collection risks 
and  is  the  exclusive  beneficiary  of  all  accruals  from  such  transactions;  the  bank  only  charges  a 
commission.  Fiduciary  funds  received  by  the  banks  mainly  come  from  abroad  and  are  almost 
exclusively invested abroad. They essentially consist of short term foreign investments in third banks or 
in branches legally dependent on Swiss banks. In the latter case, these transactions must appear in the 
balance-sheet,  since  they  involve  a  commitment  from  the  branch  towards  the  head  office  in 
Switzerland." 

EN 

52 

   EN 

 
                                                 
depositor.  Due  to  the  fact  that  the  reported  level  of  consolidation  encompasses  foreign 
branches, the re-depositing into the Swiss bank's foreign branches would not appear in Table 
38. Rather, the liability to the original depositor will appear on-balance sheet, for example in 
Table 32, while there will be no reported asset/claim to the foreign branch. That would mean 
that the positions in Table 38 would in fact reflect only the fiduciary business with third-party 
banks. 

Since  Swiss-source  income  is  currently  not  subject  to  the  "retention"  under  the  EU-Swiss 
Agreement, fiduciary deposits are quite important in the context of the EU-Swiss Agreement 
since they frequently do not represent Swiss-source income. To that extent, they do not suffer 
the Swiss anticipatory tax (and are in fact marketed with that advantage), but would rather be 
subject instead to the "retention" referred to in Article 1(1) of the EU-Swiss Agreement92.  

Fiduciary arrangements are usually offered to high net worth customers who have substantial 
portfolios  of  assets,  including  cash.  There  are  usually  commercial  and  tax  reasons  for  the 
arrangements given that the rates received are closer to those normally paid only to banks or 
large institutions, while benefiting from the spreading of risk and easier administration. 

From  an  accounting  perspective,  the  received  funds  under  a  fiduciary  arrangement  by  the 
Swiss bank are reported as off-balance sheet liabilities, while the re-deposited funds into the 
third-party bank are reported as off-balance sheet assets. The country breakdown for both is 
available from the SNB publication. 

Fiduciary liabilities 

The  geographical  breakdown  and  ranking  for  fiduciary  liabilities  (assumed  to  consist 
primarily  of  fiduciary  deposits)  appears  substantially  different  from  the  breakdown  under 
SNB Table 32 (figure (29)). There are 8 countries that may be considered as offshore centres 
among the first 15 countries and they represent an average of 67% of the fiduciary liabilities 
attributable to that group (the share of West Indies UK alone  is almost 26% on average). It 
must  be  noted  that  although  fiduciary  deposits  are  within  the  scope  of  the  EU-Swiss 
Agreement, there is currently no obligation for the Swiss paying agent to report payments to 
countries  outside  the  EU  due  to  the  absence  of  look-through  or  paying  agent  upon  receipt 
provisions in the EU-Swiss Agreement. 

92 

There  is  an  explicit  reference  to  fiduciary  deposits  in  the  EU-Swiss  agreement,  Art.  7(1)(a)  "interest 
paid, or credited to an account, relating to debt claims of every kind including interest paid on fiduciary 
deposits by Swiss paying agents for the benefit of beneficial owners as defined in Article 4". 

EN 

53 

   EN 

                                                 
Figure  29:  Evolution  of  fiduciary  customers'  liabilities  in  Swiss  banks  (million  Euros)  per 
country of creditor/depositor: 

Fiduciary Liabilities

100%

80%

60%

40%

20%

0%

Jersey
Turkey
Liberia
United States
France
Isle of Man
Germany
Italy
United Arab Emirates
Saudi Arabia
Cayman Islands
Bahamas
United Kingdom
Panama
West Indies UK

2002

2003

2004

2005

2006

2007

2008

2009

2010

It  is  also  important  to  put  into  perspective  the  fiduciary  funds  managed  by  Swiss  banks  by 
comparing  the  positions  in  Table  38  "Fiduciary  business,  by  country"  with  the  positions  in 
Table 32 "Geographical breakdown of assets and liabilities shown in the balance sheet" and in 
particular "Liabilities towards customers in the form of savings and deposits". On average, the 
share of fiduciary business in the sum of the two series is 93% (figure(30)). 

Figure  (30):  Evolution  of  share  of  liabilities  towards  Swiss-source  income  depositors 
compared to liabilities towards fiduciary business creditors/depositors in Swiss banks. 

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

2002

2003

2004

2005

2006

2007

2008

2009

2010

Liabilities for savings and deposits

Fiduciary liabiltites

EN 

54 

   EN 

 
 
 
Fiduciary assets 

The fiduciary assets geographical breakdown represents the place where the fiduciary funds 
are being re-deposited, i.e. the country of the third-party bank. 

Figure (31): Evolution of fiduciary assets invested by Swiss banks (million Euros) in country 
of debtor: 

Fiduciary Assets

100%

80%

60%

40%

20%

0%

Isle of Man
Germany
Belgium
Jersey
Guernsey
France
United Kingdom
Netherlands
Luxembourg

2002

2003

2004

2005

2006

2007

2008

2009

2010

The fiduciary funds are placed primarily in third-party banks in Luxemburg, the Netherlands, 
The United Kingdom and France. As previously outlined, the fact that a Swiss bank acts in its 
own name when re-depositing the funds received under a fiduciary arrangement would likely 
prevent  the  bank  where  the  funds  are  re-deposited  from  tracing  any  individual  depositor. 
Jersey, Guernsey and Isle of Man appear as the primary offshore centres into which fiduciary 
funds are re-deposited into third-party banks. 

As mentioned in the section on the limitation of the SNB statistics, there is a disadvantage of 
the data in that only re-depositing in third-party banks is covered. Fiduciary positions received 
by  foreign  branches  of  the  Swiss  bank  are  consolidated  and  do  not  figure  as  an  off-balance 
sheet  item.  The  Commission  has  received  from  the  BIS  under  a  confidentiality  agreement, 
and with the assistance of the SNB, the entire set of fiduciary positions, including inter-office 
positions. The data generally confirms the country breakdown officially available in the SNB 
publication  with  the  addition  of  one  country  from  South-East  Asia.  The  data  also  confirms 
that the prevailing share of fiduciary funds are received from non-banks and re-deposited in 
banks. 

Custody accounts 

The  custody  accounts  are  another  aspect  of  the  SNB  statistics  that  is  relevant  for  the  EU-
Swiss agreement. A Swiss bank that offers custody account services to its customers would 

EN 

55 

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normally deal with the beneficial owner directly and would therefore in many instances act as 
a  paying  agent.  The  SNB  publication  distinguishes  only  between  resident  and  non-resident 
custody  account  holders,  i.e.  no  detailed  country  breakdown  is  available.  It  is  therefore 
impossible  to  isolate  EU-resident  custody  account  holders  from  the  aggregated  values 
attributable to non-residents. Nevertheless, the data series provides a detailed sectoral split for 
the  account  holder  distinguishing  between  private,  commercial  and  institutional  clients. 
Another  advantage  is  that  there  is  a  separation  of  securities  by  bonds,  shares,  units  in 
collective investment schemes and other securities. 

It  is  first  useful  to  concentrate  the  analysis  on  the  series  for  bonds  (figure  (32)).  There  is  a 
clear  downward  trend  for  the  private  customers  sector,  which  starts  already  in  2002  and  is 
matched by a corresponding increase of holdings by institutional investors. The total decrease 
from  2001  to  2010  is  -52%,  i.e.  the  holdings  are  halved  over  that  period.  The  series  for 
resident private customers may serve as a control for that trend. The decrease there was only -
26%. 

Another  way  to  explore  the  evolution  of  the  custody  account  business  with  non-resident 
private  customers  is  to  look  at  the  development  of  their  aggregate  portfolio,  i.e.  in  which 
products  they  would  invest  (figure  (33)).  The  bonds  part  of  the  portfolio  shows  a  steady 
decrease from 2002, which is matched by an increase in investments in shares and especially 
in UCITS.93 Those have however decreased sharply after the beginning of the financial crisis. 

Figure (32) evolution of bonds for non-residents per  Figure  (33)  evolution  of  private  customers  category  of 
customer in Swiss banks (billions CHF) 

investments per product in Swiss banks (billions CHF) 

Bonds non-residents

Private customers

400

350

300

250

200

150

100

50

0

600

500

400

300

200

100

Bonds

Shares

UCITS

Others

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Private customers

Commercial customers

Institutional investors

0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Conclusion 

The SNB data as a whole contributed to the conclusions already drawn on the basis of the BIS 
data outlined earlier, i.e. the need of an update of the relevant agreements with third countries 
to address the cases of intermediary entities established in offshore jurisdictions. 

93 

On UCITS and the applicable definitions, c. section 3.7 below. 

EN 

56 

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3.4. 

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

Description 

The  IMF  in  its  Coordinated  Portfolio  Investment  survey  (CPIS)  reports  the  cross-border 
investment positions (holdings at market prices prevailing at the end of the year) of investors 
resident in 74 participating countries (country of investor) with a split by the corresponding 
country  of  investment  (country  of  issuer).  There  are  separate  data  sets  for  (i)  Total 
investments,  i.e.  debt  and  equity,  (ii)  Total  equity  securities,  (iii)  Total  debt  securities,  (iv) 
Long-term debt securities and (v) Short-term debt securities. Data are generally available on 
an annual basis from 2001 to 2009.  

investments  made  by 

The  CPIS  data  also  provide  a  split  based  on  categories  of  "sector  of  holder"  for  some 
countries,  which  enables  an  analysis  of 
individuals  (sector 
"households"). Nevertheless, it must be stressed that, of the EU Member States, only Cyprus, 
Denmark,  Spain,  Finland,  France,  Hungary,  Italy,  the  Netherlands,  Romania  and  Sweden 
provided data for the sector "households" for the period 2001-2009. Of those, only Denmark, 
Spain,  Italy,  the  Netherlands  and  Sweden  post  sizable  investments  by  their  resident 
households (Finland does not disclose investments by households in Austria and Luxemburg 
due to confidentiality reasons). Austria, Germany and the United Kingdom provide the data 
for the sector "households" only for 2009. 

Studies that use the data 

IMF data was used in the study "The Missing Wealth of Nations: Are Europe and the U.S. net 
Debtors  or  net  Creditors?"  by  Gabriel  Zucman  to  measure,  amongst  others,  the  shift  of 
undeclared  assets  towards  off-shore  jurisdictions.  The  study  came  to  the  conclusion  that 
recorded liabilities were significantly higher than recorded assets in the data due to investors 
not declaring assets located in tax havens. 

In  Rixen-Schwarz  (2011)94,  based  on  IMF  CPIS  data,  the  authors  examined  any  changes  to 
the  investment  patterns  of  individual  investors,  thereby  attempting  to  evaluate  the 
effectiveness of the Directive using the CPIS data for Sweden, France, Italy and Spain. Their 
conclusions were that: 

• 

• 

94 

Individual  investors  adapted  to  the  institutional  changes  to  be  implemented  before 
the Directive became effective in 2005.  

The  effect  of  product  substitutability  (debt  products  into  equity  products)  is  more 
pronounced  than  the  geographical  relocation  effect  (from  the  Directive  network 
countries into third countries). 

Rixen-Schwartz  'How  effective  is  the  European  Union’s  Savings  Tax  Directive?  Evidence  from  four 
EU Member States', Journal of Common Market Studies, Forthcoming. 

EN 

57 

   EN 

 
                                                 
• 

The  withholding  Member  States  and  countries  did  not  experience  an  outflow  of 
portfolio capital, whereas Member States exchanging information lost capital relative 
to third countries outside the scope of the Directive. 

They found strong behavioural responses by French investors, and no such evidence in regard 
to  Italian  investors,  which  they  explained  by  "the  absence  of  a  national  automatic  reporting 
system on capital income in Italy". 

Limitations of the data 

As  already  mentioned,  many  Member  States,  including  the  United  Kingdom  and  Germany, 
which report this data only for 2009, do not report a breakdown of debt claims by sector for 
the  period  2001-2009.  Therefore,  the  analysis  would  be  restricted  to  only  certain  countries 
that report this information. 

The  data  is  in  principle  compiled  according  to  where  the  debtor  (issuer)  is  located  and  the 
creditor (investor) is located which does not necessarily replicate the paying agent-beneficial 
owner stage in the payment of savings income.  

Illustrative example:  

It  is  possible  that  the  security  is  issued  by  Jurisdiction  A  and  owned  by  an  investor  in 
Jurisdiction B, but held in a custodian account with an intermediary (on behalf of the investor) 
based in a Jurisdiction C. In that case the CPIS data would show an amount of investment in 
A  by  investor  in  B,  while  the  Directive's  information  exchanged/tax  withheld  would  be 
concerned  with  the  payment  from  the  intermediary  in  Jurisdiction  C  to  the  investor  in 
Jurisdiction B.  

That  means  that  the  paying  agent  Member  State  would  not  necessarily  coincide  with  the 
debtor  country/Member  State.  Any  change  of  the  country  of  the  intermediary  from  a 
jurisdiction  within  the  geographical  scope  of  the  Directive  to  a  non-cooperating  jurisdiction 
would be therefore omitted. Issues regarding how custodians should report the relevant CPIS 
data,  in  particular  those  custodians  who  hold  securities  on  behalf  of  other  custodians  or 
nominees, are indeed mentioned in the CPIS Guide95. However, the CPIS Guide suggests that 
if the trust and the beneficiaries are located in two different countries, then it is unlikely that 
any data will be collected by either of them. It also appears that the custodian reporting may 
only  apply  in  practice  to  situations  where  the  custodian  and  the  investor  are  in  the  same 
reporting country. 

Although  product  substitutability  has  been  explored  by  Rixen-Schwarz  (2011),  it  appears 
more plausible that capital-protected fixed-income securities would rather be substituted with 
products  of  a  similar  risk  profile.  Unfortunately,  CPIS  data  does  not  include  financial 
derivatives, but would arguably cover some of the structured products and other wrappers for 
debt  securities,  while  omitting  other  products  (e.g.  any  kind  of  insurance  product)96. 
Therefore,  some  of  the  most  important  substitutable  products  are  either  not  present  in  the 
CPIS database, or would be classified as the product they were meant to substitute, i.e. as debt 
securities.  There  is  another  misalignment  between  the  Directive's  scope  and  the  CPIS 

95 
96 

http://www.imf.org/external/pubs/ft/cpis/2002/index.htm  
For more information and examples, see Appendix I to the CPIS Guide. 

EN 

58 

   EN 

                                                 
classification being that shares/units in mutual funds are classified as equity, whereas income 
from debt claims distributed (or realised at the sale of the units thereof) by UCITS or other 
undertakings  for  collective  investment  that  invest  in  debt  claims  is  within  the  scope  of  the 
Directive.  

With regard to the product scope, it must be noted that income from debt securities is only a 
part of all savings income covered by the Directive. To that end, any impact on income from 
other types of debt claims or other savings income would be omitted from the analysis. 

The CPIS represents the year-end holdings according to market prices. Therefore it would be 
impossible to distinguish between increases driven by increased investment in the particular 
asset class from an increase driven by increased asset prices. 

In addition, the tables for some of the Member States explored exhibit what appears to be an 
inconsistent use of the values denoting lack of data ("…."), zero or close to zero values ("--") 
and  confidential  data  ((c))  for  the  same  country  of  investment  in  different  years,  leading  to 
some important structural breaks. 

EU Member States 

As  outlined  above,  a  limited  number  of  countries  have  been  identified  as  having  detailed 
information  by  sector  (household  etc)  and  posting  sizable  investments  by  their  resident 
individuals:  Denmark,  Spain,  Finland,  France,  Italy,  the  Netherlands  and  Sweden  over  the 
relevant time period since the introduction of the Directive97. 

The evolution from 2001 to 2009 of portfolio investments for the Member States mentioned 
above is described below.  

From  the  surveys  for  Member  States  one  general  pattern  emerges  being  the  increase  in  the 
share  of  debt  securities  issued  by  Member  States  that  exchange  information.  The  average 
annual  growth  of  the  share  of  debt  securities  issued  by  Member  States  that  exchange 
information ranges from 3% in the Netherlands to 10% in Spain and Finland. 

France 

The  banks,  insurance  companies  and  mutual  funds  are  the  principle  sectors  of  investors 
representing a combined share that averages around 90% of all investments in debt securities. 
The household sector represents a very small part compared to other sectors. Nevertheless, it 
displays a marked relative decrease in 2003, the year of the adoption of the Directive, to one 
fifth  of  the  2002  values.  This  decrease  affects  investments  only  by  households  and  only  in 
debt securities. 

The  2003  decrease  apples  to  debt  securities  from  all  jurisdictions.  As  previously  described, 
unlike the CPIS the latter may be explained in that the Directive operates at the paying agent 
rather  than  at  the  creditor  level.  However,  it  must  be  noted  that  in  2005  the  share  of  the 
Member  States  that  apply  the  withholding  tax  doubled  from  10%  to  22%.  The  increase  in 

97 

The EU economies that demonstrate the relatively high numbers for investment in debt securities by all 
types of investors are (by order of magnitude): FR, UK, DE, LU, IE, NL, IT, BE, ES, AT, DK, PT, SE 
and FI. 

EN 

59 

   EN 

                                                 
investments  in  equity  securities  by  households  of  16%  is  below  the  increase  for  all  sectors 
(70%), but also below that for the non-financial sector (more than 22%), which encompasses 
the household sector, suggesting that an equity substitution scenario cannot be demonstrated 
either. 

Fig  (34)  Evolution  of  investments  in  debt  securities  by  FR  households  per  category  of  the 
issuer (million USD)  

18.000

16.000

14.000

12.000

10.000

8.000

6.000

4.000

2.000

0

Third countries

Agreements

MSs WHT

MSs info exchange

2001

2002

2003

2004

2005

2006

2007

2008

2009

Netherlands  

Whereas  other  Member  States  provide  a  detailed  split  by  sector  of  investor  from  2001,  the 
Netherlands data only provides such a split as from 2003. Therefore any effects prior to that 
date could not be analysed. The cumulative growth from 2003 to 200798 of investments by the 
household sector into debt securities as compared to equity securities is remarkably similar at 
148%  and  147%  respectively.  Therefore,  for  the  observed  period  a  substitution  of  debt 
securities with equity securities is present. 

If  the  jurisdictions  of  investment,  i.e.  where  the  creditor  is  established,  are  compared,  the 
share  of  jurisdictions  within  the  Savings  Agreements  network  demonstrates  a  very  strong 
increase  for  the  years  2004  and  2005.  This  is  mainly  due  to  the  investments  in  Cayman 
Islands,  which  at  almost  25%  of  all  household  investments  in  debt  securities  for  2004  and 
2005  is  the  number  one  investment  location  for  debt  securities  for  the  household  sector, 
surpassing the US, UK, DE and FR, followed by Jersey with 6% for 2004 and almost 5% for 
2005. 

98 

2008 and 2009 are not considered due to the large variations in valuation in the crisis years 

EN 

60 

   EN 

 
                                                 
Figure (35) Evolution of investments in debt securities by NL households per category of the 
issuer 

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

Third countries

Agreements

MSs WHT

MSs info exchange

2003

2004

2005

2006

2007

2008

2009

Another observed effect is on the side of equity investments by households and it is related to 
the  rapid  increase  of  equity  investment  into  the  group  of  Member  States  that  apply  the 
withholding  tax,  largely  driven  by  equity  investments  in  Luxemburg.  It  must  be  noted  that 
equity  investments  also  cover  investments  in  shares/units  in  mutual  funds  and  although  the 
CPIS  data  lacks  the  level  of  detail,  it  is  assumed  that  this  increase  is  largely  due  to  the 
increase of investments in Luxemburg-based mutual funds – figure 36. 

Fig  (36)  Evolution  of  investments  in  equity  products  by  NL  households  per  category  of  the 
issuer (million USD) 

50.000

45.000

40.000

35.000

30.000

25.000

20.000

15.000

10.000

5.000

0

Italy 

Third countries

Agreements

MSs WHT

MSs info exchange

2003

2004

2005

2006

2007

2008

2009

Compared to other Member States for the observed time period, third-country debt securities 
(mainly  US  and  International  Organisations)  held  by  Italian  households  represent  a  larger 
share of all investment locations, peaking at 51% in 2004 and 52% in 2007.  

EN 

61 

   EN 

 
 
Fig  (37)  Evolution  of  investments  in  debt  securities  by  IT  households  per  category  of  the 
issuer (million USD) 

200.000

180.000

160.000

140.000

120.000

100.000

80.000

60.000

40.000

20.000

0

Third countries

Agreements

MSs WHT

MSs info exchange

2001

2002

2003

2004

2005

2006

2007

2008

2009

Similarly  to  equity  investment  by  other  Member  States'  households,  equity  investments  in 
Luxemburg  (presumably  in  mutual  funds)  were  the  main  driver  for  the  observed  nearly 
tripling  of  the  equity  investments  from  2001  to  2007.  The  share  of  equity  investments  in 
Luxemburg grew steadily from 69% of all household equity investments in 2001 to 84,49% in 
2007. 

Fig  (38)  Evolution  of  investments  in  equity  products  by  IT  household  per  category  of  the 
issuer (million USD) 

300.000

250.000

200.000

150.000

100.000

50.000

0

Spain 

Third countries

Agreements

MSs WHT

MSs info exchange

2001

2002

2003

2004

2005

2006

2007

2008

2009

The  direct  holdings  of  debt  securities  of  ES  households  were  invested  mainly  in  Cayman 
Islands, which is the most favoured investment location for the years 2001-2007, although its 
share of total debt securities investment by households gradually dropped both in relative and 
absolute  terms  from  almost  70%  in  2002  to  30%  in  2007.  This  is  reflected  below  in  the 

EN 

62 

   EN 

 
 
dynamics  of  the  share  of  debt  securities  investments  in  jurisdictions  within  the  Savings 
Agreements network. 

Fig  (39)  Evolution  of  investments  in  debt  securities  by  ES  households  per  category  of  the 
issuer (million USD) 

25000

20000

15000

10000

5000

0

Third countries

Agreements

MSs WHT

MSs info exchange

2001

2002

2003

2004

2005

2006

2007

2008

The growth of the Luxemburg fund industry already outlined for the other Member States is 
also reflected in the ES data for households' portfolio equity investments. 

Fig  (40)  Evolution  of  investments  in  equity  products  by  ES  households  per  category  of  the 
issuer (million USD) 

40.000

35.000

30.000

25.000

20.000

15.000

10.000

5.000

0

Third countries

Agreements

MSs WHT

MSs info exchange

2001

2002

2003

2004

2005

2006

2007

2008

2009

Denmark 

Like in France, a decrease in household investments in debt securities is observed for the year 
2003,  although  it  is  not  as  pronounced  and  as  long-lasting.  It  also  affects  all  investment 
locations  across  the  board.  The  observed  rebound  in  2004  and  2005  is  driven  partially  by 
investments  in  Bermuda  –  6%  of  all  investment  locations  for  both  years  and  in  Jersey  and 

EN 

63 

   EN 

 
 
Guernsey with a combined 8,5% share in 2005. For the case of Bermuda, it must be noted that 
investments  in  debt  securities  by  the  household  sector  decreased  rapidly  in  2006  and  2007, 
while  households'  investments  in  equity  securities  increased  at  the  rate  of  almost  44%  and 
60% in 2006 and  2007, at  the time  when the investments by other sectors remained largely 
stable. 

Fig  (41)  Evolution  of  investments  in  debt  securities  by  DK  households  per  category  of  the 
issuer (million USD) 

8000

7000

6000

5000

4000

3000

2000

1000

0

Third countries

Agreements

MSs WHT

MSs info exchange

2001

2002

2003

2004

2005

2006

2007

2008

2009

Sweden 

The  household  sector  in  Sweden  investing  in  debt  securities  directly  represents  an  almost 
negligible share of all investor sectors (the insurance and banking sectors being strongest) – 
0.19%  in  2002,  but  grows  to  around  3%  in  later  years.  The  household  investors  are  largely 
biased towards investing in equity – an average of almost 95% of household investments in 
securities  is  in  equity  securities.  Luxemburg  equity  products  (presumably  mutual  funds) 
represent a very large share of all equity investments, peaking at almost 82% in 2003. 

Finland 

Like the Netherlands, Finish data covers only years after 2003. In addition, the data for some 
important locations (e.g. LU) is listed as confidential  for  2008 and 2009. For the remaining 
years  Luxemburg  is  the  leading  location  for  household  investment  in  debt  claims,  which 
increases the share of the Member States that apply the withholding tax. 

EN 

64 

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Fig  (42)  Evolution  of  investments  in  debt  securities  by  FI  households  per  category  of  the 
issuer (million USD) 

2500

2000

1500

1000

500

0

Third countries

Agreements

MSs WHT

MSs info exchange

2003

2004

2005

2006

2007

Jurisdictions within the Savings Directive agreements network 

Unfortunately,  the  level  of  detail  of  the  CPIS  data  would  not  enable  an  EU-wide  analysis 
(from  the  perspective  of  the  investor)  of  the  major  jurisdictions  within  the  Savings 
Agreements network. Nevertheless, it is possible to identify the major jurisdictions within the 
Savings  Directive  agreements  network  for  all  investor  sectors  from  the  EU  Member  States 
participating  in  the  CPIS  (essentially  all  Member  States  except  Lithuania).  In  addition,  the 
Member  States  of  residence  of  the  investor  from  which  the  major  investments  originate  do 
provide the split by sector for 2009. Of those, only Luxemburg and Ireland do not and it could 
be expected that the major part of the investors from those are from the financial industry. 

The  following  table  summarizes  the  findings  for  the  Member  States  of  residence  of  the 
investor from which the major investments originate, based on 2009 data: 

EN 

65 

   EN 

 
Inv. from 

Table 9: Share of country of issuer of financial asset categories per EU investors 
EU total 

UK** 

FR** 

LU 

of which from 
IE 

DE** 

NL** 

IT** 

All 

% * 

Debt  

% * 

All 

Debt 

All 

Debt 

All 

Debt 

All 

Debt 

All 

Debt 

All 

Debt 

All 

Debt 

392.090  2,09 

Inv. in  
2.306 
Cayman 
Islands 
(230) 
The large portfolio investments from outside the Savings Directive network of agreements come, by order of magnitude, from Japan, the US, Hong-Kong, Bermuda and from the jurisdictions within the 
Savings Directive network of agreements – from Switzerland, Guernsey and Jersey. 

257.981  2,01  114.526 
(19.907)

96.801 
(20.158)

28.958 
(640) 

61.430 
(296) 

26.419 
(158) 

21.609 
(959) 

11.690 
(745) 

41.446 
(95) 

5.436 
(289) 

35.123 

15.534 

57.186 

14.557 

Switzerland 

236.739  1,26 

697 
30.647 
(16) 
(9.737) 
The large portfolio investments from outside the Savings Directive network of agreements come, by order of magnitude, from the US, Japan, Norway, Iceland, Bermuda and from the jurisdictions within 
the Savings Directive network of agreements – from Jersey and Guernsey. 

13.433 
(2.621) 

23.940 
(3.473) 

19.725 
(1.096) 

14.891 
(653) 

35.378  0,28 

2.210 
(323) 

1.944 
(41) 

3.561 
(1) 

41.890 

18.777 

60.487 

6.807 

3.420 

UK** 

LU 

DE** 

FR** 

NL** 

IE 

SE** 

Jersey 

147.091  0.78 

4.836 
18.880 
(435) 
(324) 
The large portfolio investments from outside the Savings Directive network of agreements come, by order of magnitude, from the US, Japan, South Africa, Canada, Hong Kong and from the jurisdictions 
within the Savings Directive network of agreements – from Switzerland, Guernsey and Isle of Man. 

35.756 
(28.260)

22.947 
(3.217) 

21.700 
(3.058) 

10.129 
(249) 

111.509  0.87 

6.258 
(527) 

5.749 
(439) 

7.971 
(550) 

10.274 

18.505 

10.699 

25.708 

8.848 

UK** 

DE** 

FR** 

LU 

IE 

NL** 

IT** 

FR** 

LU 

DE** 

NL** 

BE 

AT** 

UK** 

62.084  0,33 

452 
2.773 
NL 
Antilles 
(248) 
(925) 
The large portfolio investments from outside the Savings Directive network of agreements come, by order of magnitude, from the US, Japan, Canada, Norway, Hong Kong and from the jurisdictions 
within the Savings Directive network of agreements – from Switzerland, Guernsey and Jersey. 

46.494 
(1.737)

43.444 
(58) 

53.222  0,42 

2.321 
(820) 

2.069 
(562) 

526 
(101) 

824 
(167) 

630 
(263) 

899 
(199) 

1.683 

3.967 

2.486 

1.352 

Guernsey 

35.093  0,19 

315 
5.129 
(26) 
(468) 
The large portfolio investments from outside the Savings Directive network of agreements come, by order of magnitude, from the US, Japan, South Africa, Canada, Hong Kong and from the jurisdictions 
within the Savings Directive network of agreements – from Switzerland, Isle of Man, Jersey and NL Antilles. 

18.141  0,14 

3.179 
(548) 

5.951 
(468) 

3.992 
(355) 

4.581 
(375) 

3.273 
(192) 

1.664 
(110) 

1.571 
(109) 

1.531 
(27) 

9.785 
(927) 

827 
(63) 

2.958 

1.331 

UK** 

FR** 

DE** 

NL** 

LU 

IT** 

FI** 

BVI 

18.604  0,10 

5.054  0,04 

5.724 

1.026 

LU 

FR** 

3.150 
(195) 

UK 

PT 

IE 

900 

2.499 

1.101 

1.790 

1.372 

1.348 

102 

NL** 

863 
(84) 

BE 

366 

759 

13 

The  large  portfolio  investments  from  outside  the  Savings  Directive  network  of  agreements  come,  by  order  of  magnitude,  from  the  US,  Hong  Kong,  Russia,  Canada,  Bermuda,  Japan,  and  from  the 
jurisdictions within the Savings Directive network of agreements – from Guernsey, NL Antilles, Isle of Man and Jersey. 

* % of all investment destinations by EU investors 
** figures in brackets show the values for the household sector, if available 
All figures in USD million. 

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Conclusion 

The two major trends that can be highlighted from the CPIS data on the Member States that 
provide a detailed sectoral split are that: 

(i) The introduction of the Directive did not drive individual investors away from investing in 
securities issued in EU member States and particularly those exchanging information. In fact 
the trend was opposite for most of the Member States surveyed; 

(ii)  The  Luxemburg  fund  industry  has  experienced  a  remarkable  increase  as  a  share  in  the 
equity investments of households in the EU. 

3.5. 

Eurostat data – household savings/investment patterns 

Description 

The  sectoral  accounts  data  which  is  used  for  income  elements  in  this  section  of  the  review 
combines  institutional  units  with  broadly  similar  characteristics  and  behaviour:  households 
and non-profit institutions serving households (NPISHs), non-financial corporations, financial 
corporations, and the government.  

The  households  sector  comprises  all  households  and  includes  household  firms  which  cover 
sole proprietorships and most partnerships that do not have an independent legal status. In the 
European accounts, non-profit institutions serving households (NPISHs), such as charities and 
trade unions, are grouped with households. Their economic weight is relatively limited.  

The  data  outlined  is  based  on  the  national  statistics  submitted  to  Eurostat  by  the  Member 
States, therefore cross-border transactions and financial claims among euro-area/EU Member 
States have not been removed as is normally the case to arrive at the EU wide statistics.  

Regarding  the  review  of  the  assets  held  by  households,  the  European  System  of  Accounts 
99(ESA 95)2 include balance sheets per sector to describe the stocks of assets and liabilities at 
the  beginning  and  at  the  end  of  the  accounting  period.  The  ESA  provides  not  only  a 
classification  system  and  accounts  structure,  but  also  various  rules  (valuation,  time  or 
recording, etc.) which should be followed when compiling national accounts. 

In the first review of the Directive, an analysis was made of the evolution of interest payments 
vis-à-vis  other  types  of  savings  income  and  the  evolution  of  household  recipients  vis-à-vis 
financial and non-financial corporate recipients ((i) and (ii) below). The report concluded that, 
on the basis of the data, the introduction of the Directive did not appear to have led to major 
changes in the composition of savings income. 

Limitations of the data 

The  analysis  given  below  can  only  be  regarded  as  providing  a  broad  evolution  of  the 
investment patterns of households in the EU due to the following limitations: 

99 

http://epp.eurostat.ec.europa.eu/portal/page/portal/sector_accounts/concepts/institutional_sectors 

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(a) The sectoral income elements include both cross-border income amounts which would fall 
under  the  Directive  and  the  domestic  income  amounts  which  would  not.  There  is  a  lack  of 
data regarding the proportion of assets held cross-border by households. Using data obtained 
from the ECB, the Commission has calculated that for households in the euro-area 3,48% of 
deposits  held  by  households  were  cross-border  with  other  EU  Member  States  in  2009 
(equivalent figure for 2008 is 3,16%). Therefore cross-border deposits represent a relatively 
small proportion of total deposits of households in the euro-area. Unfortunately, due to data 
constraints,  no  estimate  could  be  determined  for  all  EU  Member  States.  Given  the  small 
proportion  of  deposits  held  cross-border  with  other  EU  Member  States,  it  should  be 
underlined  that  only  a  broad  interpretation  can  be  deduced  from  the  figures  obtained  from 
Eurostat as to overall investment patterns;  

(b)  The  income  reported  to  Eurostat  stems  from  the  national  authorities  which  compile  this 
data  from  a  variety  of  sources  including  tax  authorities  and  surveys;  therefore  it  is  unlikely 
that  interest  payments  that  evade  tax  will  be  part  of  the  data  since  these  payments  are 
probably not reported by households; 

(c)  The  level  of  detail  on  both  the  income  and  asset  statistics  is  too  broad  to  allow  us  to 
determine  a  very  refined  analysis  of  the  evolution  of  products  which  have  been  deemed  as 
substitutable  to  debt  claims  and  which  are  included  in  the  Proposal  (structured  products, 
insurance wrappers, etc). Nevertheless, data on the evolution of assets has demonstrated the 
importance of financial derivatives as a component for household assets. 

Analysis 

Data from the sectoral accounts of Eurostat was used to monitor the following elements: 

(i)  The  evolution  of  the  interest  income  received  by  households  that  would  fall  under  the 
Directive compared to interest income received by all sectors of the economy; 

(ii)  The  evolution  of  interest  income  that  would  fall  under  the  Directive,  received  by 
households  as  compared  to  other  forms  of  income  (dividends  etc)  received  by  households 
which would not fall under the Directive; 

(iii) The evolution of the type of assets held by households, the income of which would fall 
under  the  Directive  (debt  claims  etc)  as  compared  to  assets  which  would  not  fall  under  the 
Directive (equity). 

The objective is to measure whether there has been a shift to assets, and their derived income 
streams, which do not fall under the Directive.  

Analysis of income received by total economy compared to households over the period (2000-
2009) (tables 10-13): 

Data  source:  Eurostat  sectoral  data  obtained  from  the  national  accounts  of  Member  States. 
Figures are based on the sum of the national accounts of Member States with the exception of 
the following: data incomplete for Bulgaria and Malta; data for Ireland not available in 2000 
and 2001 and not available for Luxemburg for 2000-2005. 

Total economy (tables 10 to 13):  

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Table 10 

Table 11 

Table 12 

Table 13 

Year 

Gross savings 
to GDP 

Property Income 
to GDP 

Interest Income 
in total property 
income 

Share of Dividend 
income in total 
property income 

2000 

2001 

2002 

2003 

2004 

2005 

2006 

2007 

2008 

2009 

20,40% 

20,16% 

19,84% 

19,65% 

20,23% 

19,90% 

20,61% 

21,37% 

20,39% 

17,57% 

36,11%

36,20%

31,86%

30,08%

30,59%

32,84%

37,62%

42,45%

42,19%

31,81%

58,01% 

57,13% 

55,45% 

52,82% 

51,10% 

50,52% 

53,51% 

56,85% 

59,42% 

51,45% 

31,16%

35,09%

34,77%

37,00%

37,19%

37,76%

35,63%

32,50%

32,41%

39,04%

The figures for gross savings100 (table (10)) as a % of GDP generally remain constant since 
2000 with a dip in 2009 due to the impact of the financial crisis, Table (11) shows that the % 
of property income received by the total economy has followed a U-curve since 2000 before 
falling back considerably in 2009 due to lower returns on financial assets. Table (12) shows 
that  the  proportion  of  interest  income  in  property  income101  has  followed  a  similar  U-curve 
between 2000  and  2006 before peaking in 2008 then  falling back significantly in 2009 as a 
result  of  lower  yields  on  deposits  and  bonds102.  Table  (13)  demonstrates  that  the  fall  in 
interest  income  has  been  matched  by  a  similar  increase  in  dividend  income  over  the  same 
period. 

100 
101 

102 

Gross saving is defined as gross disposable income less final consumption expenditure. 
Property income is defined as the income received less expenses accruing, during the income reference 
period, by the owner of a financial asset or a tangible non-produced asset (land) in return for providing 
funds to or putting the tangible non-produced asset at the disposal of another institutional unit. 
The property income is broken down into: 
1. Interest, dividends, profits from capital investment in an unincorporated business (HY090G); 
2. Income from rental of a property or land (HY040G). 
For example the rate for outstanding amounts for all maturities in the euro-area decreased from 4,03% 
in December 2008 to 2,57% in December 2009 

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Households (tables 14 to 17): 

Table 14 

Table 15 

Table 16 

Table 17 

Share of interest 
income of 
households in 
total interest 
income 

Share of dividend 
income of 
Households in 
total dividend 
income 

Year 

Share of interest 
income in 
Households' total 
property income 

Share of dividend 
income in 
Households' total 
property income 

2000 

2001 

2002 

2003 

2004 

2005 

2006 

2007 

2008 

2009 

18,86% 

18,41% 

18,02% 

18,29% 

18,08% 

16,36% 

14,56% 

13,87% 

13,95% 

13,82% 

50,95%

49,28%

50,16%

49,47%

48,85%

46,90%

43,66%

42,49%

43,05%

44,16%

31,89% 

30,75% 

28,50% 

27,00% 

26,52% 

24,84% 

26,21% 

28,65% 

29,66% 

22,54% 

46,27%

48,48%

49,76%

51,15%

52,16%

53,22%

52,33%

50,17%

49,93%

54,64%

Table 14 shows that interest income received by households as a % of total interest income 
received by all sectors of the economy has been on a downward trend since 2000 but this is 
also matched by a similar decrease in dividend income received by households as a % of total 
dividend  income  received  by  all  sectors  of  the  economy  (Table  15).  Table  (16)  shows  a  U-
curve between 2000 and 2008 for interest income as % of total property income of households 
with  a  significant  dip  in  2009.  Table  (17)  shows  an  increase  between  2000  and  2009  for 
dividend  income  as  a  proportion  of  total  property  income  of  households.  The  decrease  of 
interest income received reflects the financial crisis and the significantly lower yields on debt 
claim assets the income of which falls under the Directive rather than a decrease in debt claim 
assets  held  by  households  as  disclosed  in  tables  (18)  and  (19)  below  of  assets  held  by 
households. 

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Analysis of assets held by households: 

Table (18): financial assets held by households in millions of Euro. 

1999 

2000 

2001 

2002 

2003 

2004 

2005 

2006 

2007 

2008 

2009 

Currency and deposits 

5.111.033 

5.250.815 

5.615.770 

5.835.193 

6.055.882 

6.432.663 

6.863.744 

7.364.008 

7.744.310 

7.891.101 

8.213.711 

Loans 

70.465 

70.941 

72.158 

70.178 

75.539 

74.974 

77.071 

83.092 

86.115 

103.643 

99.152 

Securities other than shares 
Other accounts 
receivable/payable 

1.079.001 

1.162.407 

1.266.706 

1.345.627 

1.316.202 

1.389.431 

1.392.621 

1.442.313 

1.470.748 

1.510.045 

1.501.396 

442.924 

486.348 

511.769 

539.494 

520.767 

537.062 

580.491 

648.469 

644.414 

631.878 

680.417 

Financial derivatives 

228.321 

260.297 

328.113 

328.839 

493.292 

581.548 

703.566 

3.432.587 

4.943.715  11.604.382 

6.926.641 

Mutual funds shares 

3.048.777 

3.217.797 

3.418.226 

3.204.138 

3.662.827 

4.014.914 

4.719.310 

7.181.492 

7.492.072 

5.720.192 

6.871.170 

Shares and other equity 

5.957.315 

5.917.406 

5.409.356 

4.574.892 

5.007.312 

5.402.883 

6.195.332 

6.815.047 

6.853.032 

4.874.815 

5.559.698 

Insurance technical reserves 

5.853.554 

6.064.254 

6.276.737 

6.024.420 

6.367.949 

6.915.769 

7.904.450 

8.641.655 

8.760.537 

7.592.160 

8.567.133 

Total 

21.791.390  22.430.265  22.898.835  21.922.780  23.499.770  25.349.244  28.436.585  35.608.662  37.994.941  39.928.217  38.419.317 

Table (19): category of financial asset as a % of total household financial assets 

1999 

2000 

2001 

2002 

2003 

2004 

2005 

2006 

2007 

2008 

2009 

Currency and deposits 

23,45% 

23,41% 

24,52% 

26,62% 

25,77% 

25,38% 

24,14% 

20,68% 

20,38% 

19,76% 

21,38% 

Loans 

Securities other than shares 
Other 
receivable/payable 

accounts 

Financial derivatives 

Mutual funds shares 

0,32% 

4,95% 

2,03% 

1,05% 

0,32% 

5,18% 

2,17% 

1,16% 

0,32% 

5,53% 

2,23% 

1,43% 

0,32% 

0,32% 

0,30% 

0,27% 

6,14% 

5,60% 

5,48% 

4,90% 

0,23% 

4,05% 

0,23% 

0,26% 

3,87% 

3,78% 

0,26% 

3,91% 

2,46% 

1,50% 

2,22% 

2,10% 

2,12% 

2,04% 

1,82% 

1,70% 

1,58% 

1,77% 

2,29% 

2,47% 

9,64% 

13,01% 

29,06% 

18,03% 

13,99% 

14,35% 

14,93% 

14,62% 

15,59% 

15,84% 

16,60% 

20,17% 

19,72% 

14,33% 

17,88% 

Shares and other equity 

27,34% 

26,38% 

23,62% 

20,87% 

21,31% 

21,31% 

21,79% 

19,14% 

18,04% 

12,21% 

14,47% 

Insurance technical reserves 

26,86% 

27,04% 

27,41% 

27,48% 

27,10% 

27,28% 

27,80% 

24,27% 

23,06% 

19,01% 

22,30% 

Total 

100,00% 

100,00% 

100,00% 

100,00% 

100,00% 

100,00% 

100,00% 

100,00% 

100,00% 

100,00% 

100,00% 

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The  income  from  the  following  categories  of  assets  would  come  within  the  scope  of  the 
Directive if it is cross-border income: deposits, loans, securities other than shares, and other 
accounts receivable/payable. In the category currency and deposits currencies are estimated at 
2,86% in 2009 of the total amount (3,13% in 2008). For mutual funds, this would depend on 
whether the assets of the fund would fall within the scope of the Directive in terms of their 
investment  in  debt  claims103.  Given  the  current  scope  of  the  Directive,  it  would  be  unlikely 
that financial derivatives would fall within this scope.  

From the above analysis we can see that the assets that would definitely fall within the scope 
of the Directive (that is deposits, loans and (debt) securities) has fallen from 28.7% of total 
assets  in  1999  to  25.5%  of  total  assets  in  2009.  However,  during  the  same  period  the 
proportion of equity assets has fallen by an even greater percentage from 27,34% to 14,47% 
which  may  reflect  the  greater  risk  aversion  of  households  in  the  EU,  although  Table  (17) 
shows a relatively higher proportion of dividend income in savings income  

The  category  of  financial  derivatives104  has  increased  from  a  very  low  base  of  1,05%  to 
18,03%  of  total  household  assets.  A  more  refined  analysis  of  this  data  shows  that  the 
overwhelming  majority  of  the  balance  of  6,926.6  billion  Euro  derives  from  UK  households 
which comprise 5,878.4 billion Euro of this balance with French households the next highest 
at EUR 407 billion. The large amount for financial derivatives was first recorded by the UK 
national  authorities  in  2006  and  according  to  the  UK  data  sources  this  was  due  to  more 
detailed  survey  methods105  of  allocating  financial  derivatives  to  the  counterparty  sectors 
including  households.  The  financial  derivatives  acquired  by  the  household  sector  in  the  UK 
have largely been in the form of interest rate swaps but since the end of 2009 there has been a 
shift towards credit derivatives.  

It  should  be  noted  that  the  data  provided  to  Eurostat  comes  from  the  national  authorities 
therefore the accuracy of the data depends on the completeness of the data provided for this 
analysis. It could be that such product diversification is also a feature of other Member States 
but  the  data,  or  survey  methodology,  is  not  available  to  demonstrate  this  or  it  is  already 
included in the other asset categories without further refinement.  

Conclusion: 

A comparison was made between income received by households compared to all sectors of 
the  economy  for  income  elements  inside  and  outside  the  scope  of  the  Directive  to  check 
whether  there  has  been  product  substitutability.  The  data  revealed  that  interest  income 
received by EU households as a proportion of property income106 was relatively stable until 
2008  before  falling  sharply  in  2009  due  to  lower  interest  rates  received  on  debt  claims 

103 
104 

105 

106 

According to EFAMA statistics 23% of total funds are classified as bond funds in 2010. 
The  European  System  of  Accounts  (1995)  defines  derivatives  as  financial  assets  based  on  or  derived 
from a different underlying instrument. The underlying instrument is usually another financial asset, but 
may  also  be  a  commodity  or  an  index.  Financial  derivatives  are  also  referred  to  as  secondary 
instruments and since the hedging or off setting of risk are frequently a  motivation for their creation, 
they can be referred to as hedging instruments. Only those secondary instruments, which have a market 
value, because  they  are  tradable or  can  be off  set  on  the market,  are financial  assets  in  the  system  of 
accounts and are classified as derivatives. 
Bank of England survey: DQ survey of financial derivatives business and PL survey of MFIs' profit and 
loss 
Property income: income derived from assets 

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following the financial crisis, a trend which also applies to the total economy. Therefore, no 
shift  towards  products  outside  the  scope  of  the  Directive  could  be  observed.  However,  it 
should be noted that a major limitation of the Eurostat data is that it contains both domestic 
and cross-border income that falls under the Directive therefore only broad conclusions can be 
drawn.  

An analysis of debt assets held by households revealed that these assets have been relatively 
stable over the period 2000-2009 compared to equity held by households which almost halved 
over  the  same  period,  perhaps  reflecting  the  greater  risk  aversion  of  investors.  A  notable 
development is the large increase in financial derivatives held by households (1,05% of total 
households' assets in 1999 and 18,03% in 2009). This would tend to support an extension of 
the  scope  of  the  Directive  to  include  structured  financial  products  where  the  asset  base  is 
equivalent to debt claims. 

3.6. 

Structured retail products 

Description 

The structured retail products database107 was launched in 2001 and contains detailed data on 
a  variety  of  structured  products108,  claiming  coverage  of  over  2  million  structured  products 
launched worldwide, with a dedicated coverage of 34 markets109. Starting from January 2005 
the  database  is  estimated  to  include  around  90%  of  the  structured  retail  products  issued  in 
Europe. The database is organised according to the market of the investor, allowing extracts 
per,  inter  alia,  asset  class,  capital  protection,  distribution  channels,  payoffs,  type  of  product 
provider, terms, underlying, wrapper group, etc. Both the number of products and volumes (in 
EUR million) are indicated. The breakdowns are available for product launches, while more 
aggregated data are available also for stocks. 

Studies that use the data 

The AMTE110 report111 of December 2007 analysed the retail savings market and structured 
product  market  until  December  2006  in  key  EU  Member  States.  The  report  focuses  on  the 
different products, their distribution to retail markets in the EU, and the main barriers to the 
European  distribution  of  these  products.  The  report  notes  the  increasing  share  of  structured 
products in the retail market, the two main reasons outlined being (i) the search for increased 
returns in a low interest rate environment and (ii) increase of the risk-aversion and demand for 
higher capital protection. In terms of distribution, it comments on the limited number of cross-

107 
108 

109 

110 
111 

http://www.structuredretailproducts.com/  
Structured  products  are  defined  for  the  purposes  of  the  database  as  "an  investment  product  that  most 
often uses derivatives to deliver a pre-defined return, usually on a passive or formulaic basis regardless 
of  the  wrapper  tax  status.  Structured  products  typically  come  in  two  forms:  growth  products  (which 
may provide an element of capital protection) and income products (that provide a fixed high income 
but with a risk to the capital return)." 
Europe:  Austria,  Belgium,  Czech  Republic,  Denmark,  Finland,  France,  Germany,  Hungary,  Ireland, 
Italy, Netherlands, Norway, Poland, Portugal, Slovakia, Spain, Sweden, Switzerland and the UK.  
North America: USA and Canada.  
Latin America: Brazil, Chile and Mexico.  
Asia-Pacific:  Australia,  China, Hong Kong, India,  Japan,  Malaysia,  New  Zealand, Singapore,  Taiwan 
and South Korea. 
Euro debt market association 
http://www.icmagroup.org/ICMAGroup/files/1c/1cc0911c-5257-4631-aed7-bcb453627f88.pdf  

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border sales. Another reason for the fragmentation of the market is found in the flexibility of 
the structured products  to  provide comparable returns through  different wrappers  depending 
on their tax treatment in the country where those are marketed. 

Limitations of the data 

The  point  where  the  database  does  not  reflect  exactly  the  typical  cross-border  setup  of  the 
Directive  and  the  Proposal  is  that  the  database  is  mainly  targeted  at  the  client  market  and 
would  not  distinguish  between  products  distributed  domestically  and  cross-border. 
Nevertheless,  the  data  may  reveal  the  evolution  of  investment  patters  of  retail  investors  in 
general,  regardless  of  the  presence  of  a  cross-border  element.  In  addition,  focusing  on 
distributors which are primarily oriented to cross-border investments (e.g. from Luxemburg or 
Switzerland) could be a way to mitigate that limitation. 

Evolution of structured products 

The  launching  of  new  structured  products  has  increased  dramatically  over  the  2000-2007 
period  with  an  average  annual  increase  of  more  than  30%  for  the  structured  products  as  a 
whole  and  with  an  average  annual  increase  of  57%  for  the  products  with  less  than  100% 
capital  protection.  Despite  the  rapid  growth  of  products  with  less  than  100%  capital 
protection,  the  products  with  protection  of  100%  and  above112  are  still  dominating  the 
launches  in  terms  of  volumes  with  a  share  of  60-70%  of  all  products  (figure  (43)).  In  that 
context,  the  capital  protection  condition  under  Art.  6(1)(aa)(i)113  of  the  Proposal  would 
arguably cover a substantial share of the structured products, if it is assumed that the capital 
protection  breakdown  and  dynamics  for  the  products  that  are  distributed  cross-border  are 
similar to those for the aggregate volumes shown below. 

i.e. providing additional fixed income to the capital protection 
Article 6 

112 
113 
Definition of interest payment 
1. For the purposes of this Directive, ‘interest payment’ means 
(aa) any income paid or realised, or credited to an account, relating to securities of any kind, except where the 
income is directly considered to be an interest payment in accordance with points (a), (b), (c) or (d), and 
where  
(i)  the  conditions  of  a return  of  capital  defined  at  the  issuing date  include  a  commitment  towards  the 
investor that he receives, at the end of the term, at least 95% of the capital invested, or 
(ii) the conditions defined at the issuing date provide for a link of at least 95% of the income from the 
security to interest or income of the kinds referred to in points (a), (b), (c) or (d); 

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Figure (43): Evolution of structured product by category of capital protection (million Euros) 

Capital protection

250.000

200.000

150.000

100.000

50.000

0

More than 100%

100%

Less than 100%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Another important comparison is with regard to the asset class specification – figure (44). The 
asset class refers mainly to the composition of the structured product's underlying assets. The 
major  asset  classes  are  equity  (single  index,  single  share,  share  basket  and  index  basket), 
interest  rate,  commodities  and  hybrid  classes.  The  share  of  the  interest  rate  asset  class  rose 
from 3.19% in 2001 to almost 30% in 2007. It must be noted that those structured products 
linked  to  an  interest  rate  underlying  would  normally  fall  within  the  scope  of  Art. 
6(1)(aa)(ii)114 of the Proposal. 

Figure (44): Evolution of structured product by category of asset class (million Euros) 

300000

250000

200000

150000

100000

50000

0

Asset class

Equity (Single Index)

Interest Rate

Equity (Share Basket)

Equity (Single Share)

Equity (Index Basket)

Commodities

Hybrid

Credit

Inflation

FX Rate

Fund

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

114 

see footnote 79 

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   EN 

 
 
 
                                                 
In addition, the breakdown per wrapper class (figure (45)) would reveal the relative shares of 
launched products according to the type of instrument that is used for the product structuring. 
The securities wrapper class is the prevailing one with both the largest share and the strongest 
increase across the observed period. The other three significant types of wrappers are funds, 
deposits and life insurances. Of those, only the funds wrapper could potentially fall within the 
current scope of the Directive and only in cases where the underlying assets consist of debt 
claims. The expansion of the scope of the Directive would cover securities as per Art. 6(1)(aa) 
and  life  insurances  as  per  Art.  6(1)(e),  which,  as  mentioned,  do  appear  as  major  wrapper 
groups. 

Figure (45): Evolution of structured product by category of wrapper class (million Euros) 

300000

250000

200000

150000

100000

50000

0

Wrapper Class

Security

Fund

Deposit

Life Insurance

Pension,Security

Pension,Security,Tax
Efficient Scheme

Fund,Tax Efficient Scheme

Fund,Life Insurance

Life Insurance,Security

Fund,Life Insurance,Tax
Efficient Scheme

Special Purpose Vehicle

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

The  "provider  group"  (figure  (46))  and  "distribution  channel"  (figure  (47))  breakdowns  are 
relevant to the identification of potential paying agents for structured products that would be 
within the scope of the Directive. From the provider group breakdown it is apparent that it is 
mostly  banks  and  insurance  companies  that  are  involved  in  the  structuring  of  the  products. 
From the distribution channel breakdown it is also apparent that the large majority of products 
are marketed by the providers' sales force115. Figure (47) shows that the share of the direct116 
sales  force  group  has  increased  substantially  since  2005  and  reached  almost  30%  in  2009, 
which in theory increases the possibility that those products are sold cross-border. 

115 

116 

Under  the  database  definition  the  distribution  by  sales  force  is  when  "sales  are  made  via  a  tied  sales 
force owned by the Provider or Provider Group, often based in bank branches". 
Under the database definition the direct distribution is when "sales are made directly to the end investor 
via the internet, the telephone or post." 

EN 

76 

   EN 

 
 
                                                 
Figure (46) Evolution of structured products Figure (47): Evolution of structured products per 

Per category of provider group (million Euros) 

category of distribution channel (million Euros) 

Provider Group

250000

200000

150000

100000

50000

0

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Cross-border markets 

Retail Bank or
Savings Institution
Universal Bank

Insurance Company

250000

Investment Bank

200000

Asset or Fund
Manager
Commercial Bank

Private Bank or
Wealth Manager
Other

Securities Company

Special Purpose
Vehicle
Independent
Financial Adviser
Pension Company

Academic Institution

150000

100000

50000

0

Distribution Channles

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Salesforce

Direct.Salesforce

Financial
Advisers

Direct

Financial
Advisers.Salesfor
ce

Direct.Financial
Advisers.Salesfor
ce

Direct.Financial
Advisers

Although  the  database  does  not  allow  a  separate  split  for  products  manufactured  in  one 
country but sold in another, it is possible to focus the analysis on markets with a large cross-
border potential. It has been established that within the EU Luxemburg is the main platform 
for  manufacturing  products  in  one  country  and  distributing  those  in  other  countries,  while 
outside the EU it is Switzerland. 

The  database  shows  1707  products  manufactured  in  Luxemburg  (figure  (48)).  The  primary 
markets  for  those  are  Belgium,  France,  Sweden,  Germany,  the  Netherlands  and  Austria.  In 
addition, 55% of all products manufactured in Luxemburg are with a protection greater than 
95%. In terms of volumes, these are not public and therefore no comparison could be done. If 
any conclusions should be drawn from the aggregate EU data, the average volume per product 
for  products  with  capital  protection  lower  than  100%  is  much  lower  than  that  for  products 
with capital protection higher than 100% (figure (49)). This would be translated in a higher 
share of the products with capital protection higher than 100% (or 95% as per the Proposal to 
the Directive) in terms of volumes. 

Figure (48): number of LU structured funds marketed Figure (49): LU manufactured products per capital  
in other EU Member States 

protection category 

Primary Markets for LU structured products

Capital protection of LU manufactured products

63 40

93

106

519

727

Belgium
France
Sweden
Germany
The Netherlands
Austria

769; 45%

938; 55%

More than 95%
protection
Less than 95%
protection

The database shows 928 products manufactured in Switzerland. The major primary market for 
those  is  Germany  with  841  products  distributed  there.  The  exposure  to  the  French,  Dutch 
Austrian  and  Italian  client  base  is  much  smaller.  In  addition,  34%  of  all  products 
manufactured  in  Switzerland  are  with  a  protection  greater  than  95%.  In  terms  of  volumes, 
these are not public and therefore no comparison could be done. If any conclusions should be 

EN 

77 

   EN 

 
 
 
drawn from the aggregate EU data, the average volume per product for products with capital 
protection  lower  than  100%  is  much  lower  than  that  for  products  with  capital  protection 
higher  than  100%.  That  would  be  translated  in  a  higher  share  of  the  products  with  capital 
protection  higher  than  100%  (or  95%  as  per  the  Proposal  to  the  Directive)  in  terms  of 
volumes. 

Figure (50): number of Swiss structured products in EU 
Markets capital protection category 

Figure (51): Swiss manufactured products per  

Primary markets for CH structured products

Capital protection of CH manufactured products

13

13

16

26

841

Conclusion 

Germany
France
The Netherlands
Austria
Italy
Belgium
Norway
Spain
UK

614; 66%

314; 34%

More than 95%
protection
Less than 95%
protection

The  rapid  development  of  the  structured  products  market  in  general  and  in  particular  the 
products with capital protection and interest-based underlying, as well as the development of 
particular  European  markets  that  are  primarily  serving  foreign  investors,  means  that  the 
inclusion  of  those  types  of  instruments  in  the  amendments  to  the  Directive  and  the  Savings 
Agreements is both justified and necessary. 

3.7. 

UCITS 

For  the  purposes  of  this  document,  the  term  UCITS117  is  meant  to  refer  to 
undertakings  or  entities  authorised  in  accordance  to  Directive  2009/65/EC118 
(formerly  Directive  85/611/EEC119).  The  terms  non-UCITS  and  non-UCITS  funds 
refers to all other collective investment funds or schemes. 

Interest income distributed through UCITS is generally included in the scope of the Directive. 
As  noted  in  the  report  for  the  first  review  of  the  Directive,  the  treatment  of  UCITS  in  the 
Directive differs from other collective schemes in the EU known as non-UCITS which are not 
fully captured by the Directive. Their treatment varies between those non-UCITS with legal 
personality 
legal  personality 
(unincorporated  or  "contractual"  funds  and  trusts,  etc).  Income  from  the  former  is  excluded 
from  the  scope  of  the  Directive,  whereas  unincorporated  non-UCITS  are  subject  to  the 
Directive as "paying agents on receipt", in regard to their income (Art.4 (2)). This difference 

those  non-UCITS  without 

(incorporated 

funds)  and 

117 
118 

119 

Undertakings for Collective Investment in Transferable Securities  
Directive  2009/65/EC  of  the  European  Parliament  and  of  the  Council  of  13  July  2009  on  the 
coordination  of  laws,  regulations  and  administrative  provisions  relating  to  undertakings  for  collective 
investment in transferable securities (UCITS), OJ L 302, 17.11.2009, p. 32 
Council  Directive  85/611/EEC  of  20  December  1985  on  the  coordination  of  laws,  regulations  and 
administrative  provisions  relating  to  undertakings  for  collective  investment  in  transferable  securities 
(UCITS), OJ L 375, 31.12.1985, p. 3 

EN 

78 

   EN 

 
 
                                                 
in treatment under the current Directive makes it important to assess the evolution of UCITS 
and non-UCITS in the EU to ensure there have been no distortions.  

Data from EFAMA  

EFAMA30 has provided the Commission with an evolution of the value of UCITS and Non-
UCITS as well as their respective sub categories for 2002 to 2010 (table 20). The % of UCITS 
in the total has decreased from 78% in 2002 to 75% in 2010 while the corresponding figure 
for Non-UCITS has increased from 22% in 2002 to 25% in 2010. Furthermore, in terms of the 
breakdown of sub-categories bond funds, which would typically come within the scope of the 
Directive, have decreased from 31% in 2002 to 23% of total funds in 2010. This decrease has 
resulted in an increase in the % share of other sub-categories of funds which may be outside 
the scope of the Directive depending on their asset composition.  

Table  (20)  evolution  of  UCITS  and  non-UCITS  funds  over  the  period  2002  until  2010  in 
millions of Euro: 

UCITS
Equity Funds
Bond funds
Balanced funds
Money market funds
Funds of funds
Other UCITS

2002
973.922
958.431
441.374
619.992
46.223
65.739

2003
1.173.681
1.043.367
482.155
674.305
52.369
73.950

2004
1.346.979
1.041.532
526.117
798.932
50.476
104.208

2005
1.814.341
1.197.326
637.933
844.605
78.002
155.519

2006
2.206.946
1.248.326
779.931
843.424
93.085
201.447

2007
2.199.724
1.194.501
854.941
912.228
100.145
250.645

2008
1.191.319
922.229
636.542
1.026.403
64.464
183.977

2009
1.610.346
1.074.591
762.235
977.207
89.863
203.101

2010
1.919.097
1.255.828
897.246
824.585
78.145
256.198

Total UCITS (1)

3.105.681

3.499.827

3.868.244

4.727.726

5.373.159

5.512.184

4.024.934

4.717.343

5.231.099

Total for all countries (2)

3.344.183

3.785.200

4.211.551

5.190.680

5.955.905

6.158.576

4.599.636

5.314.674

5.989.630

NON UCITS
Real estate funds
Special funds (3)
Other Non-UCITS 

118.996
576.882
189.903

138.885
621.070
213.678

154.986
683.325
231.375

176.610
803.775
322.033

195.411
866.203
402.041

207.994
944.802
457.377

200.991
879.276
336.516

212.448
1.002.806
379.439

232.462
1.166.049
308.649

Toat Non UCITS (1)

885.781

973.633

1.069.686

1.302.418

1.463.655

1.610.173

1.416.783

1.594.693

1.707.160

Total Non UCITS (2)

951.160

1.050.020

1.160.967

1.423.968

1.610.461

1.769.770

1.546.135

1.745.990

2.034.890

Total UCITS and Non UCITS (1)

3.991.462

4.473.460

4.937.930

6.030.144

6.836.814

7.122.357

5.441.717

6.312.036

6.938.259

Total UCITS and Non UCITS (2)

4.295.343

4.835.220

5.372.518

6.614.648

7.566.366

7.928.346

6.145.771

7.060.664

8.024.520  

Notes: 

(1) For all countries reporting UCITS & non-UCITS assets breakdowns 

(2) For all countries 

(3) Funds reserved to institutional investors 

Limitations  with  the  data  supplied  by  EFAMA  for  the  purposes  of  the  analysis  are  the 
following: 

(i) The data does not give any breakdown on the EU cross-border element of the funds which 
would come within the scope of the Directive; 

(ii) These funds  do  not give  a  breakdown of the holder of the fund between retail investors 
who would come within the scope of the Directive and others which would not come within 
the scope of the Directive (e.g. institutional investors); 

EN 

79 

   EN 

 
(iii)  The  data  gives  product  category  definitions  and  therefore  does  not  provide  sufficient 
refinement to determine the evolution of specific types of funds which are outside the current 
scope of the Directive but have a return/asset composition that is similar to funds which do 
come within the scope of the Directive.  

EFAMA  noted  in  its  contribution  that  it  would  be  difficult  to  ascertain  any  meaningful 
conclusions  regarding  investment  patterns  due  to  the  existence  and  the  operation  of  the 
Directive, including that of cross-border payments to the beneficiary. 

ECB data on cross-border holdings of investment funds 

With  regard  to  (i)  above  the  ECB  has  supplied  data  showing  the  evolution  since  the  end  of 
2008  of  cross-border  funds  issued  in  all  EU  Member  States  and  held  by  households  in 
Member States in the euro-area. The data is partially based on estimates. The data show that 
94,3% of total cross-border amounts (EUR 466,7 billion) have been issued by Luxemburg at 
the  end  of  the  first  quarter  of  2011,  which  demonstrates  the  importance  of  Luxemburg  as  a 
financial centre for UCITS. However, it is not possible to say that this translates directly to 
the  concept  of  cross-border  holdings  and  income  as  contained  in  the  Directive  as  the  latter 
relates to paying agent while the data from the ECB relates to the issue of funds. 

A  recent  report120  by  Oliver  Wyman,  commissioned  by  the  Luxemburg  Fund  Association 
Industry  (ALFI),  indicated  that  alternative  investment  funds  are  principally  domiciled  in 
offshore  locations.  In  the  case  of  hedge  funds,  which  may  come  under  the  Directive 
depending  on  their  asset  composition,  the  Cayman  Islands  had  the  largest  share  at  52%  of 
global AUM (assets under management), followed by Delaware at 22%. The Proposal brings 
greater clarity to the current Directive's provisions by ensuring that the Directive encompasses 
interest  and  equivalent  income  from  all  third  country  funds,  irrespective  of  their  legal  form 
and of how they are placed with investors.  

Conclusion 

From  the  aforementioned  analysis  it  is  not  clear  that  there  has  been  a  significant  switch  to 
forms  of  funds  and  fund  products  that  would  be  outside  the  scope  of  the  Directive, 
particularly  in  light  of  the  limitations  of  the  data  given  above.  However,  any  possible 
distortion between these various forms and fund products is addressed in the Proposal which 
has an equivalence of treatment between UCITS and non-UCITS funds.  

3.8. 

Insurance products 

The  substitution  of  products  within  the  scope  of  the  Directive  to  those  products  outside  the 
scope of the Directive was highlighted in the first review of the Directive. In the case of life 
insurance products, the Proposal includes a provision under Article 6(1)(e)121 to include those 
life  insurance  products  which  could  be  comparable  to  interest  bearing  products  that  are 
currently within the scope of the Directive. 

http://www.alfi.lu/publications-statements/press-releases/report-alternative-investment-funds-domicile 
(e) benefits from a life insurance contract, if 

120 
121 
(i) the contract contains a guarantee of income return, or 
(ii) the actual performance of the contract is at more than 40% linked to 
interest or income referred to in points (a), (aa), (b) (c) and (d). 
(The 40% thresholds referred to in points (d) and (e) (ii) of paragraph 1 and in paragraph 3 shall from 1 January 

2011 be 25%). 

EN 

80 

   EN 

 
                                                 
This  review  did  not  find  any  studies  that  have  analysed  the  aforementioned  substitutability. 
However,  there  is  anecdotal  evidence  of  the  increased  popularity  of  life  insurance  products 
with  an  investment  element.  The  IMF  report122  Andorra:  Assessment  of  Financial  Sector 
Supervision and Regulation states: 

"The  Andorran  financial  sector  has  experienced  significant  changes  over  the  past  five  years 
(Table 1). First, as in other jurisdictions, the low interest rate environment caused a shift in 
customer’s portfolios, away from bank deposits and into financial instruments offering higher 
returns and asset management, with the obvious consequence of shifting on balance sheet to 
off-balance  sheet  products.  In  this  context,  bank  deposits  remained  mostly  flat,  while  assets 
managed  by  banks  and  collective  investment  entities  grew  by  12.8,  and  16.0  percent  yearly 
average  respectively  from  2000  to  2005.  Second,  since  July  2005  Andorra  started  the 
retention of EU taxes on savings income earned by EU residents. The prospect of higher taxes 
induced  EU  customers  of  Andorran  banks  to  seek  alternatives  to  savings  instruments  by 
moving  into  other  financial  instruments,  including  life  policies  offered  by  life  insurance 
companies  controlled  by  Andorran  banks.  As  a  result,  life  insurance  premiums  grew  from 
EUR 61 million in 2004 to EUR 1.8 billion in 2005." 

Similarly,  there  have  been  reports  in  the  financial  press123  about  investors  switching  to  life 
insurance wrapper products in order to hide undeclared assets. By their nature, these are more 
difficult to accumulate statistics on. 

A  comprehensive  overview  of  the  life  insurance  market  can  be  found  in  the  2010  study124 
undertaken  by  Europe  Economics  for  the  PRIPs  (packaged  retail  investment  products) 
initiative  of  the  Commission.  Although  the  study  gives  useful  statistical  information  on  the 
size  of  the  EU  life  insurance  market,  including  life  insurance  products  with  an  investment 
element,  it  does  not  include  an  analysis  of  the  distribution  channels  as  far  as  cross-border 
selling  is  concerned.  However,  CEA  has  provided  the  Commission  with  the  data  in  the 
following  paragraphs  for  cross-border  selling  of  insurance  premiums  up  to  and  including 
2007. 

For our purposes, the life insurance market can broadly be divided into the following: 

(i) Traditional life insurance products like term life insurance which pays a specified amount 
of money if the policy maker dies, or other biometric risk, during the term of the policy; 

(ii) Other life insurance products which are, in substance, investments. 

The report to Council for the first review of the Directive noted that life insurance products in 
category (ii) should come within the scope of the Directive where they are deemed as having 
no  significant  biometric  risk  coverage  and  where  their  performance  is  strictly  linked  to 
income  from  debt  claims  or  equivalent  income  covered  by  Art.  6  and  where  their 

122 
123 

124 

EN 

http://www.imf.org/external/pubs/ft/scr/2007/cr0769.pdf 
Bloomberg article 06/04/2010 U:\doss\000xyz\000703 Review Savings Directive\000703 2011 Review 
Savings  Directive\studies\substitution  effect\Background\Switzerland  Threatens  Tax  Cheats  Using 
‘Wrappers’ From Insurers - BusinessWeek.mht 
Study on the Costs and Benefits of potential changes to distribution changes for Insurance Investment 
Products 
products. 
http://ec.europa.eu/internal_market/consultations/docs/2010/prips/costs_benefits_study_en.pdf 

Non-MIFID 

investment 

packaged 

retail 

other 

and 

81 

   EN 

 
                                                 
characteristics  (notably  liquidity)  allow  them  to  be  marketed  as  substitute  products  to 
undertakings for collective investment. 

Typically  category  (ii)  products  include  unit  linked,  index  linked  and  certain  with-profits 
products. The recent initiatives on the Insurance Mediation Directive (IMD) and PRIPS by the 
Commission  seek  to  obtain  similar  regulatory  and  disclosure  requirements  for  category  (ii) 
type  life  insurance  products  when  comparable  to  other  financial  instruments  with  the  same 
characteristics. Table 21 below shows the importance of the unit linked life insurance sector, 
particularly  in  important  financial  centres  in  the  EU  for  cross-border  investment  in  funds, 
such  as  Ireland  (92,5%  of  life  insurance  premiums  in  2008)  and  Luxemburg  (77,0%  of  life 
insurance premiums in 2009).  

According  to  the  Europe  Economics  report,  the  EU  life  insurance  market  was  worth  €621 
billion (gross premiums) in 2008. The UK was by far the largest market, with gross premiums 
in 2008 of €183 billion, followe d by France (€141 billion in  2008) and Germany (€76 billion 
in  2008).  The  smallest  market  was  Latvia,  with  gross  premiums  in  2008  of  €27  million. 
Although  not  directly  comparable,  interest  income  received  by  EU  households  in  2009  was 
estimated at EUR 266 billion on total deposits and currencies of EUR 8,214 billion (source: 
Eurostat).  

EN 

82 

   EN 

 
Table (21): evolution of unit-linked life insurance as a % of total life insurance premiums 

Member State
AT
BE
BG
CY
CZ
DE*
DK*
EE
EL
ES
FI
FR
HU
IE
IT
LT
LU
LV
MT
NL
PL
PT
RO
SE
SI
SK

2005
4,6%
26,1%
6,9%
74,4%

12,3%
10,8%

10,2%
36,2%

46,0%
91,7%
35,9%
44,3%
82,8%
22,1%
14,5%
44,0%
36,9%
34,3%
34,9%
49,7%
22,5%
17,3%

2006
5,4%
20,5%
8,0%
74,9%
24,0%
12,1%
16,8%
58,7%

16,4%
44,4%
22,3%
57,7%
93,3%
39,5%
62,3%
84,8%
35,1%
14,1%
41,8%
46,1%
37,5%
36,6%
47,9%
40,6%
29,4%

2007
7,5%
15,1%
11,5%
75,1%
34,0%
14,3%
19,4%
71,4%
28,8%
17,4%
45,7%
21,4%
66,3%
94,2%
47,3%
78,2%
86,3%
58,2%
11,7%
41,9%
47,0%
33,8%
33,7%
39,5%
46,2%
23,4%

2008
15,4%
10,4%
7,4%
73,8%
37,9%
16,2%
20,8%
53,2%
22,4%
19,0%
29,5%
14,4%
62,2%
92,5%
34,0%
69,1%
76,9%
18,3%
11,1%
38,4%
16,2%
34,8%
27,9%
39,4%
47,0%
31,6%

2009
14,1%
9,4%
5,3%

40,1%

15,3%
15,2%
29,1%

61,0%

12,0%

77,0%
12,6%

21,4%
28,8%

38,6%
45,8%
28,3%  

The CEA has provided data (table 22) on cross-border life insurance premiums for the period 
2003-2007. The CEA reports that there is no evidence of any significant new data trends in 
2009.  

EN 

83 

   EN 

 
 
Table (22): Evolution of cross-border premiums in selected EU Member States in millions of Euro (source: CEA)  

Annex 1

CEA data

Direct business in EU/EEA countries 

2007

2006

2005

2004

2003

Member State

Belgium

Finland

France

Germany

Ireland (i)

Italy

Luxemburg (ii)

Netherlands

Portugal

Spain (iii)

United Kingdom (iii)

Total

Cross

Border

262

196

Total

21658

11918

1227

137080

401

78901

Cross

Border

261

74

1141

251

%

1,2%

1,6%

0,9%

0,5%

20460

38590

53,0%

15830

69

9838

614

89

195

19030

52381

61439

0,1%

80

10387

94,7%

10805

26367

9369

23341

196346

615396

2,3%

0,9%

0,8%

9,7%

8,5%

548

89

195

19030

48304

Cross

Cross

Cross

Total

%

Border

Total

%

Border

Total

%

Border

Total

%

20643

11806

140203

74714

30350

69377

11296

26143

8762

23341

196346

612981

1,5%

0,5%

0,8%

337

71

19891

10357

580

105341

0,3% 220,9

25177

11251

120668

72636

23780

73471

1,3%

0,6%

0,8%

0,3%

376

60

929

236,8

52,2% 12730

0,1%

95,7%

2,1%

1,0%

0,8%

575

8908

579

74

387

53,5%

0,8%

9377

95,0%

24824

9136

21004

2,3%

0,8%

1,8%

9390

103

7086

651

40,7

272

1,7%

0,7%

0,6%

0,3%

48,5%

0,2%

68399

19350

65627

7475

94,8%

25136

9136

19530

2,6%

0,4%

1,4%

264

66

345

201

6550

63

4970

506

31

144

17524

9982

92022

67618

14520

62780

1,5%

0,7%

0,4%

0,3%

45,1%

0,1%

5321

93,4%

24838

5402

17799

2,0%

0,6%

0,8%

9,7% 18000

164485

10,9% 19555

151637

12,9%

17027

142937

11,9%

7,9% 42854,8

555809

7,7% 38307

501879

7,6%

30167

460743

6,5%

The figures show that while the premiums of cross-border life insurance remain relatively low in 2007 (8,5% of the listed Member States total volume 
of premiums), important cross-border financial centres like Luxemburg (94,7%) and Ireland (53%) continue to have a significant proportion of their 
business in the sale of cross-border life insurance. Data from the ECB also indicated that these Member States have a high proportion of cross-border 
fund investments which could potentially fall under the Directive.  

Conclusion: 

Given the size of the unit linked life insurance market in the EU and the importance of cross-border life insurance in important EU financial centres, 
the  data  above  reinforces  the  importance  of  extending  the  scope  of  the  Directive  to  include  these  life  insurance  products  which  are  equivalent  to 
financial products already within the scope of the Directive.  

EN 

84 

EN