Tax Directive loophole to close

The European Commission has proposed closing a loophole in the European Union’s (EU) Savings Tax Directive with the aim of reducing tax evasion. The legislation has mandated since 2005 the circulation of savings account information between EU member states and associated jurisdictions, or the levying of a withholding tax on account holders. However, account holders have evaded this by setting up foundations or trusts to handle their financial interests. Under reforms proposed by the Commission, payments to such organisations established inside or outside the EU would be covered by the legislation. The law would also be extended to securities, investment funds and life insurance contracts.