What is the European Union (EU) Savings Tax Directive?
The EU Savings Tax Directive is legislation relating to Tax in EU Member States and associated territories. The main purpose of the Directive is to allow the tax authorities in EU Member States and associated territories to share information about savings income payments (i.e. interest payments) made to individuals. This is to help ensure that savers and investors pay the right amount of tax on their savings income and to counter cross border tax evasion within the EU. There are two systems operating under the Directive, ‘information exchange’ and ‘withholding tax’, and EU Member Sates and associated territories can decide which system to adopt. The UK is currently operating under an ‘information exchange’ regime. NS&I, as a UK paying agent (paying agents are any institutions/individuals who pay out savings income) is required to make an annual report to HM Revenue & Customs (HMRC). HMRC will exchange this information with the tax authority of the country concerned. The scheme builds o
