Commissioned report:
The Proposed Directive on Harmonisation of Taxation of Interest Payments

In May 1998, the European Commission, based on a mandate of the Council of Ministers, submitted a proposal for a Directive to 'ensure a minimum of effective taxation of savings income in the form of interest payments within the Community'. The professional market associations, ISMA, IPMA and banking associations reacted strongly to the proposal, not least because of the inclusion of eurobonds.

Against this background, the Edmond Israel Foundation decided to launch an independent report, based on interviews with market participants and regulators. The report was prepared by Promethée, a Paris-based think-tank, and puts the proposed Directive in a more general framework of the changing and globalizing markets and the competitiveness of the EU financial centres.

The main conclusions and recommendations are to:

• Set up a high level group within Europe to reflect upon and make proposals on tax convergence after the euro;

• Engage market participants, notably professional associations such as IPMA and ISMA in a dialogue, also on the treatment of eurobonds;

• Engage the OECD partners in a co-ordinated effort to establish an OECD wide withholding tax, possibly with some regional rate differences that could fit into the global financial infrastructure needed for the smooth functioning of global financial markets.

The Edmond Israel Foundation hopes that the report will contribute to a constructive debate on tax harmonisation and on the creation of a more level playing field in Europe after the introduction of the euro.

A complete version of the report is available on this web site. Please click 'html version' below to access.

Alternatively, the report can be downloaded in .pdf file format, for which the Adobe Acrobat Reader is required. Acrobat Reader can be downloaded from the Adobe internet site at no cost.
 

 
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