The EU Directive on the Taxation of Savings Income (Directive called “Savings”), adopted on 3 June 2003, entered into force on 1 July 2005.
It aims to avoid the fight against tax evasion and organize the exchange of information between Member States, to allow effective taxation of interest in the State where the beneficiary resides. It is not tax harmonization, as each state imposes then, according to its domestic law, interest earned by its residents and who come from another Member State.
Austria, Belgium and Luxembourg have opted for a transitional system of withholding tax for a certain period, the other Member States, including France; have decided to practice the exchange of information. For example, if a Spaniard holds a book in France whose income would be taxed if the book was held in Spain, the French establishment content of the booklet will inform French tax authorities on income received, which in turn inform his Spanish counterpart.
This Directive applies to any person who domiciled in a Member State for tax purposes, who receives interest by paid a credit institution established in another Member State. Its scope includes debt securities, treasury bills, contracts and capitalization bonds, certificates of deposit, savings in general and for current accounts, as well as some funds. It also includes income of most regulated savings products including: booklet sustainable development (ex CODEVI) savings plans (PEL and CEL), PEP, LEP, Young booklet. However, income from insurance products (life insurance) and pensions as well as actions, do not fall within the scope of the “savings”.