Business and Finance

We can help you with tax planning issues in Spain and EU member states with the new EU taxation of Savings Directive.

The purpose of the Directive is to harmonise the taxation of Individual's interest income in the EU member states and also to prevent tax evasion.

Beware!! This means that the authorities in most member state will disclose information about your Bank accounts, offshore bank accounts and savings accounts to your home tax authorities.

On the 3rd of July 2003 the 15 EU countries agreed to adopt a taxation of savings directive to become effective as of January 1st 2005. The directive was to apply also to the 10 new member states. Furthermore, it was assumed that Switzerland, Lichtenstein, Monaco, San Marino and Andorra would agree to implement similar taxation rules. In addition to these countries, the Isle of Man, the Channel Islands and certain Caribbean countries were to also adopt the directive. As Switzerland among others, had difficulty implementing the directive by the due date, the Council decided to postpone the implementation until the 1 July 2005.

The European Union member states agreed July 19 to postpone until July 1, 2005, the implementation of a long-awaited and highly controversial cross-border tax on interest income from savings accounts. The EU law will take effect provided Switzerland ratifies a separate agreement to impose a savings tax on income earned by EU citizens with Swiss bank accounts. ...The commission also recognized that, if Switzerland does not implement the law, the EU savings tax will not take effect. "If the Swiss reject it, the whole deal will collapse," the commission official said. "But we do not think that will happen as the Swiss government and banking industry are very happy with this deal as they can maintain bank secrecy." In the Swiss banking industry, the new cross-border tax has been dubbed "the dummy tax" because they believe there are numerous loopholes that will make it easy to avoid.

It is yet uncertain that Switzerland will be able to comply with this agreement by 1 July 2005 and in the case Luxembourg is likely to demand that the EU postpone the Commencement again.

How will this directive affect you?

Under the Directive, most E.U. jurisdictions will automatically exchange information with each other about the beneficial ownership of accounts. Where an individual, resident in the European Union, has an account in another E.U. jurisdiction, that E.U. jurisdiction will deliver the account holder information to the jurisdiction where the account holder is resident. The jurisdictions with banking secrecy will not automatically exchange information in this way. The jurisdictions with banking secrecy will instead impose a withholding tax on savings income.

Banking Secrecy will be maintained by three member states (Luxembourg, Belgium and Austria) and no exchange of Information will take place. These Members agreed to the Directive, on the condition that other non-E.U. jurisdictions agree to the terms of the Directive also. These other non-E.U. jurisdictions are: Switzerland, the USA, Liechtenstein, Andorra, Monaco and San Marino and the dependant territories of E.U. States. The European Union must agree that these other jurisdictions will implement (or already have) "equivalent measures". The purpose of the equivalent measures is to protect the banking industry in Belgium, Luxembourg and Austria. As a main rule, they will implement a withholding tax, but expect to leave their clients the option of reporting to their home tax authorities instead.

The withholding tax will be levied at a rate of 15 percent during the first three years starting on January 1, 2005; it will increase to 20 percent as from January 1, 2008; and to 35 percent as from January 1, 2011 (the "transitional period"). The revenue received from the withholding tax will be shared between the withholding jurisdiction, and the jurisdiction of the E.U. resident.

The directive concerns interest income for persons who are residents of one EU country and who hold accounts in another EU country or in one of the countries outside the EU, which have adopted the directive. The directive is to be reviewed every third year after commencement, which may result in amendments.

If you believe this directive may affect you in any way here in Spain, or would like any help with any other tax planning issues please do not hesitate to contact us.

We are professional intermediaries to the offshore banks & financial institutions specializing in secure personal and corporate offshore banking and financial resources. We provide products and services from countries that still respect every individual's right to privacy in financial affairs.

We provide a complete range of offshore financial products & services including, but not limited to:

• Offshore Company Formation / Incorporation services in Belize, Costa Rica, Gibraltar, Malta, Nevis, Panama, Seychelles, St. Vincent and many of the other financial havens around the globe.
  
  
• Asset Protection Trusts in Belize, Panama, and several other jurisdictions.
  
  
• International debit & credit card products, with NO CREDIT CHECKS.

Tax Planning is wise decision, do it today, you will be glad you did!

Any questions? Email us today!!!