EU Savings Tax Update & Solutions

Automatic exchange of information is of course the ultimate objective of the Directive, but a number of the nations have instead adopted a policy of automatically withholding tax from the customer’s gross interest earned. The level of tax withheld on a customer’s account initially started at 15% in 2005, but was quickly

raised to 20% in the summer of July 2008. We should all be aware however that it doesn’t stop there; by 2011 the tax automatically withheld will have risen to a shocking 35% unless you plan in advance.

Who is Affected and How?

If you reside in an EU country and you have a fixed interest bearing bank account, saving or investment in another of the above list of nations it is highly likely that you will be affected by the EU Savings Tax Directive. This either means an automatic exchange of information or that you are losing at least 20% of your gross interest annually in order to keep your financial matters confidential.

The good news in all of this is that there are effective and legitimate solutions and structures available to the majority of expatriates whose nest egg and savings are being affected by the European Savings Tax Directive. Some of the solutions that you may be able to explore include special types of portfolio bonds or other investment wrapper type vehicles which can protect your personal privacy and protect the performance of your savings & investments as well.

Every individual’s circumstances are unique and you may or may not be eligible to structure your investments so as to avoid the automatic exchange of information or lose 20% of your gross interest in order to keep your funds confidential. It is essential for you to get a personalised review of your situation. It is no good thinking that a vehicle that your friend has would be suitable for you. Expatriates should always seek tailored analysis of their situation. The ‘Offshore Investment Designer’ will point you in the direction of the best solutions for you.