NEWS | Wednesday, 11 June 2008

Malta to retain higher withholding tax from bank accounts abroad

David Darmanin
With effect from 1 July, individual savers banking in EU member states other than the country of residence will be subject to a withholding tax increase of 5 per cent, to 20 per cent when compared to the 15 per cent rate agreed on with the publication of the savings tax directive in 2005.
Moreover, the same measures will be applied in Andorra, Liechtenstein, Monaco, San Marino and Switzerland under specific agreements concluded with the EU.
The same measures are also applied in ten dependent and associated territories of the Netherlands and the United Kingdom (Guernsey, Jersey, the Isle of Man and seven Caribbean territories), also under specific agreements concluded with each of the member states.
The EU savings tax directive, first established in 2005, called on EU member states to exchange information on interest paid in one member state to individual savers resident in another member state, so as to allow the interest to be taxed in the member state of tax residence.
For a transitional period, Belgium, Luxembourg and Austria may instead transfer 75 per cent of the tax revenue to the member state of tax residence, retaining 25 per cent to cover their own administrative costs.