TKF Weblog

20.02.2006

How Swiss paying agents implement the EU interest taxation on savings income

In June 2003 the European Union (EU) published a Directive on the taxation of savings income, which came into force on 1 July 2005. The aim of the Directive is to guarantee effective taxation of cross-border interest payments made to physical persons domiciled in the EU.

Given the complexity of the Directive and the bilateral agreement between Switzerland and the EU, implementation represents a major challenge for paying agents, particularly from the standpoint of their computer applications. First, paying agents must precisely identify the actual beneficial owners, a concept that leaves room for endless legal squabbling. Second, they must obtain detailed information relating to interest paid on debt claims (in the widest sense) and by investment funds (which have invested in these debt claims). It goes without saying that, given the various national interpretations, the definition of interest gives rise to difficulties in practice.

This is an extract of an article published by the Swiss financial magazine l'Agefi. Read the full article.

This article is also available in German, French and Italian.

Find more documentation about the EU Directive on the taxation of savings income.