Complexity of reporting and the potential change in the time-frame are the two key issues spawned by the European Union Savings Directive (EUSD). Or so concluded a seminar hosted by Rhyme Systems, a supplier of IT to fund managers.
Over 50 delegates from across the industry and commerce attended the event held at Rhyme’s London offices on 6 July. It included presentations from the Inland Revenue, Financial Times Interactive Data and City Consultants.
The seminar focused on the new reporting requirements the Directive will create and the time frames that businesses need to adhere to. The Directive aims to counter cross border tax evasion by collecting and exchanging information about individuals receiving savings income outside their resident state. Member states, dependent territories and third countries are either collecting and exchanging information, or, are introducing withholding tax.
The regulatory changes (contained in sections 17 and 18) mainly affect banks, registrars, custodians and other financial institutions that make interest payments to individuals. In the UK, private client asset managers are directly impacted if they have overseas resident clients who receive savings interest or coupon payments. The Directive comes into effect at the earliest on 1st January 2005 although this date will probably be delayed by six months to July 2005 – an official announcement is expected soon.
“The seminar identified the key points of the EUSD that we and our clients need to be aware of,” says Steve Lally, Products Director of Rhyme Systems. “It enabled us to show our commitment to our clients and their businesses and collectively plan a way forward.”