Online version: http://www.lowtax.net/newsletter/ltx_focus_october08.asp

Dear Colleague,

This July, the rate of tax withheld from returns on savings under the EU's Savings Tax Directive increased from 15% to 20%, and in three years' time will come the final increase to a swingeing 35%.

Although the Commission's attempts to broaden the scope of the tax to include jurisdictions like Hong Kong have been firmly rejected so far, it certainly hasn't given up. Urged on by Germany, which is in a stew of righteous indignation over the 'discovery' that thousands of its citizens are making hay while the sun shines in Liechtenstein, a Commission Review Group which has been working away for two years is expected to recommend a major extension of the Directive in the EU itself to close loopholes which have permitted many investors to escape the tax until now, for example by moving assets from bank accounts to vehicles such as companies and trusts - which weren't included in the legislation - or by shifting money to accounts based in territories out of the reach of the directive's information sharing provisions.

EU Tax Commissioner Laszlo Kovacs is due to issue a formal proposal by November outlining the amendments. However, as in all EU tax matters, in order to ensure that the proposal is adopted, the unanimous backing of all 27 member states is required.

While Switzerland and Luxembourg support the European Union's efforts to ensure that investment income is properly taxed under the Savings Tax Directive, the two countries are insistent that they will not be persuaded by Brussels to adopt exchange of information with other member states for tax purposes.

You can read the rest of the feature here:
http://www.investorsoffshore.com/html/specials/october08_std.html

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Kind regards,

Kate James

News Headlines from Tax-News.com

Sir Martin Votes With His Feet, by Jeremy Hetherington-Gore, Tax-News.com, London Thursday, October 09, 2008 Sir Martin Sorrell, head of advertising conglomerate WPP, who decided just last week to move his company to Ireland to escape the UK's penal treatment of international dividend income, chaired the inaugural meeting last Sunday in London of the International Business Advisory Council, new Mayor Boris Johnson's advisory group which aims to maintain London's pre-eminent position as a business centre. [ FULL STORY ] Norway's 2009 Draft Budget Announced, by Ulrika Lomas, Tax-News.com, Brussels Thursday, October 09, 2008 The Norwegian government has announced a number of new tax measures for 2009 as part of its recent budget statement, although the overall level of taxation in Norway is to remain the same. [ FULL STORY ] New Tax Rule Enabled Wachovia Deal, by Mike Godfrey, Tax-News.com, New York Thursday, October 09, 2008 A little-noticed but highly significant change of the rules on use of tax losses made possible Wells Fargo's takeover of Wachovia Corporation last week, and will probably enable much more restructuring of the US banking industry. [ FULL STORY ] Greek Government 2009 Draft Budget Includes Tax Reforms, by Ulrika Lomas, Tax-News.com, Brussels Wednesday, October 08, 2008 In the 2009 draft budget presented to parliament on Monday, the Greek Finance Minister George Alogoskoufis, unveiled his proposals to make fiscal reform the centrepiece of its economic policy which is aimed at maintaining growth, increasing employment and social cohesion. [ FULL STORY ] European Report Advocates 'Tobin Tax' On Financial Transactions, by Ulrika Lomas, Tax-News.com, Brussels Wednesday, October 08, 2008 A report commissioned by the Ecosocial Forum Europe, presented to the Council of Economics and Finance Ministers for consideration at yesterday’s meeting, has outlined two new strategies aimed at creating a new system of EU own resources intended to sustain the economy and help the poor: the implementation of a general financial transaction tax and a new European energy tax. [ FULL STORY ]