Cross-Border Savings Taxation in the European Union: An Economic Perspective

Posted: 27 Jul 2004

See all articles by Michael Keen

Michael Keen

International Monetary Fund (IMF) - Fiscal Affairs Department; CESifo (Center for Economic Studies and Ifo Institute); Institute for Fiscal Studies (IFS)

Jenny E. Ligthart

Tilburg University - CentER, Department of Economics; University of Groningen - Faculty of Economics and Business; CESifo (Center for Economic Studies and Ifo Institute)

Abstract

While the literature has paid a lot of attention to the institutional arrangements and practicalities of tax information exchange, the economics has hardly been touched. Many questions arise. Why would source countries (that is, those in which the savings income arises) ever voluntarily exchange tax information with residence countries (in which the saver resides), and so make themselves less attractive to foreign investors? Why is it - as the EU experience has been - that small countries prefer to levy withholding taxes while large countries favor information exchange? Can side payments - that is, the sharing of revenue from taxing cross-border savings - be employed to induce small countries to switch from withholding taxes to information exchange? This article reviews what is known about the answers to these questions, with a view to providing an economic perspective on the savings taxation Directive.

Keywords: Savings tax directive, international tax competition, international tax evasion, information exchange, withholding taxes

JEL Classification: H77, H87, F42

Suggested Citation

Keen, Michael and Ligthart, Jenny E., Cross-Border Savings Taxation in the European Union: An Economic Perspective. Tax Notes International, Vol. 33, No. 6, pp. 539-546. Available at SSRN: https://ssrn.com/abstract=569061

Michael Keen

International Monetary Fund (IMF) - Fiscal Affairs Department ( email )

700 19th Street, NW
Washington, DC 20431
United States

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

Institute for Fiscal Studies (IFS)

7 Ridgmount Street
London, WC1E 7AE
United Kingdom

Jenny E. Ligthart (Contact Author)

Tilburg University - CentER, Department of Economics ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands
+31 13 466 8755 (Phone)
+31 13 466 4032 (Fax)

University of Groningen - Faculty of Economics and Business ( email )

Postbus 72
9700 AB Groningen
Netherlands

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

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