The UK has won its battle with the European Union to avoid the forced introduction of a withholding tax on the savings of non-residents.
Accountancy Age, 04 Jun 2003
Instead European finance ministers have agreed to a set of rules that will see the governments of EU countries forced into an exchange of information on non-residents' savings that will see taxes imposed in the country of residence.
The possibility of an EU withholding tax threatened the position of the City of London as Europe's main financial centre and would severely hurt its bond market, according to government ministers.
The deadlock on this long-running proposition was broken after EU ministers convinced Italy to drop its opposition by resolving an unrelated dispute over milk production, dating back to 1989.
Only three countries, Austria, Belgium and Luxembourg are expected to introduce a withholding tax following the agreement, with other EU countries expected to go with information exchange.
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