European Union savings taxation
In the European Union, member states have
concluded a multilateral
agreement on information exchange. This
means that they will each report (to their counterparts in each other
jurisdiction) a list of those savers who have claimed exemption from local taxation on grounds of not being a resident of
the state where the income arises. These savers should have declared that
foreign income in their own country of residence, so any difference suggests tax evasion.
(For a
transition period, some states have a separate arrangement. they may offer each
non-resident account holder the choice of taxation arrangements: either (a)
disclosure of information as above, or (b) deduction of local tax on savings
interest at source as is the case for residents).
A
recent study by Business Europe
confirms that double taxation remains a problem for European MNEs and an
obstacle for cross border trade and investments. In particular, the problematic
areas are limitation in interest deductibility, foreign tax credits, permanent
establishment issues and diverging qualifications or interpretations. Germany
and Italy have been identified as the Member States in which most double
taxation cases have occurred.
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