• Service: Tax, Global Mobility Services, Global Compliance Management Services, International Tax
  • Type: Regulatory update
  • Date: 3/21/2014

EU - Expanded scope of Savings Taxation Directive 

March 24:  The European Council on 24 March 2014, formally adopted the EU Savings Taxation Directive. The new rules will likely be applicable as from 2017.

March 21:  The European Council, according to a 21 March 2014 release, has agreed to a revised Savings Taxation Directive.

On 20 March 2014, Luxembourg agreed to a proposed revision of the EU Savings Taxation Directive, thereby clearing the way for the EU Council of Ministers to adopt amendments that would provide for taxation of interest payments made by financial institutions to residents of other EU Members States. In effect, this change would broaden the scope of the automatic exchange of information concerning which account holders receive what interest payments.


The proposal to revise and extend the scope of the EU Savings Taxation Directive was originally issued by the European Commission in November 2008.

Some EU Members States (including Austria and Luxembourg) took the position that they would only consider an extension of the scope of the EU Savings Taxation Directive in case a “level playing field” was maintained in Europe. In other words, their position has been that the taxation of savings agreements concluded in 2004 or 2005 between the EU and Switzerland and between the EU and four other third countries (Liechtenstein, Monaco, Andorra, and San Marino) must be updated to reflect the extended scope of the EU Savings Taxation Directive.

After several months of standstill, negotiations started in January 2014.

Expanded scope

Under the initial version of the EU Savings Taxation Directive (2005), the scope was limited to the taxation of savings income in the form of interest payments on debt claims— and excluding issues relating to the taxation of insurance benefits.

With a view to closing existing loopholes in its current scope and better preventing tax evasion, the scope of the new EU Savings Taxation Directive has been broadened to cover and apply to the following in the future:

  • Certain non-UCITS investment funds (e.g., SICAV-Part II) and certain structured products that are currently not within the scope of the Directive
  • Certain insurance contracts (unit linked insurance contracts) whose benefits are, to some extent, derived from debt claims
  • A look-through approach to certain EU and non-EU entities or legal arrangements (including trusts, transparent entities)

What’s next?

The road ahead is still long before the formal and final adoption of the updated Savings Taxation Directive. First, it must be enacted at European Union-level and then transposed into the national laws of each of the EU Member States.

In view of these facts, the entry into force of the extended scope of the EU Savings Taxation Directive in not expected to take place in Luxembourg prior to 1 January 2017.

Read a March 2014 report [PDF 66 KB] prepared by the KPMG member firm in Luxembourg: EU Savings Directive

Read a March 2014 report prepared by the KPMG member firm in the Netherlands: European Council agreed to adopt amendments to EU Savings Taxation Directive

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