Interest Royalty Directive

1
Interest / Royalty Directive

• Savings Directive
• Ton Kemp
• February 2004

2
Interest / Royalty Directive

• Purpose elimination of withholding tax on
  interest and royalties between group companies
  within the EU

3
Relevance?

• For interest for most EU countries, interest
  withholding tax already eliminated by tax treaty
• Relevant only for selected countries Belgium,
  Poland

For royalties applicable from 1 January 2011
4
Conditions

• legal status, relationship (25), beneficial
  owner

• decision issued by tax authorities

5
So Far the Politicians

• NOW THE REAL STUFF

6
The Arnoud Gerritse Case

• ECJ TAXATION OF GROSS INCOME INFRINGES FREE
  MOVEMENT OF SERVICES!

7
Other Changes in Tax Aspects Interest

• Thin capitalisation

• Interest paid to foreign creditors

• Foreign exchange differences

8
Savings Directive

• Paying agent
• collects certain information on individual
  recipients of interest income (deposits, bond,
  investment instruments)
• reports details of payments to EU residents

Czech tax authorities inform the tax authorities
of the recipients home country.