Following approval of the Savings Tax Directive on June 4th, 2003 by the EU Council of Economic Affairs and Finance Ministers, the Irish Bankers Federation (IBF) has established a Working Group to liase with the Revenue Commissioners on the implementation of the Directive.
The IBF say that introducing the Directive is likely to prove highly complex, due to the widely drawn definition of interest, difficulties in the identification of paying agent and the volume of customer information institutions may need to obtain going forward.
The Savings Tax Directive, which must be transposed into national law by January 1st, 2004, will require all EU states to exchange information on interest-bearing investments held by residents of other member countries. The obligation on financial institutions to capture additional information on customers commences on 1 January 2004, and so the banking industry must now face this tight deadline. Among the requirements of the Directive for the industry, are changing the account opening process, in order to capture the information required by the Directive at this point, making the passport or national identity card the critical documents in establishing identity, and establishing the tax residence of the customer based on the tax identification number (TIN).
While the Directive has been approved, there are a number of ‘grey’ areas remaining, which is expected will be clarified in the national legislation which will be introduced by the end of the year. Some of these areas include the definition of key terms such as ‘new contractual relations’, ‘other documentary proof’ and residual entities. The areas of trusts, partnerships and joint accounts also require clarification. |
