ELEMENTS FOR A MINIMUM COMMUNITY SOLUTION
IN THE AREA OF THE TAXATION OF SAVINGS
With a view to preparing possible Community legislation
in this area, the Member States are invited to confirm their agreement
that the following elements can together form a basis for a Commission
I. A common solution is needed in order
to prevent undesirable distortions of competition. Agreement on
a minimum solution in the form of a directive is preferable to
the continuation of the current situation, which entails tax avoidance,
erosion and a loss of revenue.
II. The scope of this Directive should be limited
to interest paid in one Member State to individuals who are not
resident for tax purposes in that State but who are resident in
another Member State, in order to focus primarily on redressing
the possible non-taxation of non-residents.
III. The proposed Directive should be based on
the so-called "co-existence model". Under such a model
each Member State will operate either a minimum withholding tax
or provide information on savings income to other Member States,
in order to ensure at least some effective taxation of non-residents'
income from savings within the Community. A Member State may combine
IV. Any withholding tax on interest payments
made to residents of other Member States will, in principle, be
levied by the paying agent. Refinement of this method might be
needed in order to counter tax avoidance and evasion more effectively
and to avoid double taxation. The arrangements for checking the
fiscal residence of beneficiaries will not be cumbersome.
V. The provisions of the Directive will take
into account the need to preserve the competitiveness of European
financial markets in a global context. The elements described
above should be adopted as widely as possible. To this end Member
States will promote their adoption at an international level,
and in particular will give active support to their adoption in
their dependent or associated territories.