Commission presses ahead with Luxembourg enquiry

The European Commission has confirmed plans to refer Luxembourg’s application
of parts of the European Savings Directive to the European Court of Justice.

The EC is concerned about interest payments made to beneficial owners who
benefit from non-domiciled residency status in their country of residence,
according to

Luxembourg legislation currently allows paying agents to forgo levy
withholding tax on interest payments to beneficial owners.

A statement released by the EC said: ‘The commission is of the opinion that
the paying agent has the obligation to establish the residence of the beneficial
owner on the basis of minimum standards.

‘If the beneficial owner is a resident of another member state in accordance
with these standards, the member state of the paying agent must ensure that the
latter applies the Directive and, in the case of Luxembourg, that the paying
agent levies a withholding tax on interest payments to such a beneficial owner.’

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