New Savings Directive next week?
After the ECOFIN meeting of 11 March 2014, EU Commissioner Šemeta believed that “it is clear that we are very near the finishing line.” An update of the Savings Tax Directive needs unanimity and in the past Luxembourg and Austria have been reluctant to agree on the new proposal and have put their agreement to the new Directive under the condition that third countries (such as Switzerland, Liechtenstein) would apply the same measures.
Commissioner Šemeta continued “with the EU leaders’ endorsement next week, I believe that the Savings Tax Directive will still be adopted before the end of this month.” He refered to the meeting on 21 March 2014.
What changes for Luxembourg in case the EU leaders agree on the updated Savings Tax Directive?
Summary of the key proposals
In a nutshell, key points in the updated proposal are:
- Certain non-UCITS investment funds (e.g. SICAV-Part II) and certain structured products that are currently out of scope of the Directive will be covered in the future.
- Inclusion of insurance contracts (unit linked insurance contracts) whose benefits are, to some extent, derived from debt claims.
- A look-through approach to certain non-EU entities or legal arrangements (including Trusts, transparent entities…).
- Investments held by individuals through certain EU intermediate structures such as Trusts, will qualify as “paying agents upon receipt” and thus fall into the scope of the updated Savings Tax Directive.
Entry into force
The proposed new Savings Tax Directive must be implemented by the Member States on the first day of the third calendar year in which the Directive enters into force. This would mean that Luxembourg would have to implement the revised Directive on 1 January 2017 at the earliest if the proposal is adopted in 2014.
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