TaxPersonal TaxEU tax fears spark eurobond issues

EU tax fears spark eurobond issues

Banks in Luxembourg and Belgium are rapidly issuing eurobonds with issue dates before the 1 March, as confusion reigns over whether EU ministers will impose a retrospective tax on cross-border investments.

A two-year dispute over EU savings tax policy was resolved in June last year following intial proposals to levy a a controversial minimum withholding tax on non-resident savings. The UK – fearing the damage it could have on the City’s lucrative eurobond market – put forward a plans for a system of information exchange. The compromise reached allows a withholding tax to be introduced in some countries in conjunction with the British programme.

Nobody seems sure whether or not a 1 March deadline will matter, but one market analyst in Luxembourg told Sunday Business the motto at the moment was ‘better safe than sorry’.

Retail clients have responded by buying eurobonds in response to the uncertainty.

The final withholding tax plan is scheduled to be signed in December 2002 and could include all transactions dating back to 1 March 2001. However, it remains uncertain whether the proposal will be agreed to at all, since EU ministers have been unable form agreements over tax disclosure with Switzerland or the US.

Links

EU states near deal on savings tax

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