European Union Savings Tax Directive
What is the EUSTD?
How does the EUSTD affect me?
What do I need to do next?
If you have recently changed your address and have not informed us, please download and complete the change of address form which can be found in the downloads section of this website.
You can also download our EUSTD quick summary guide to help you determine whether you are affected by the European Union Savings Tax Directive.
What is the EUSTD?
The EUSTD is an agreement between the EU Member States to automatically exchange information with each other about individuals who earn interest in one EU Member State but reside in another.
This means that, for example, where a resident of Spain holds a bank account in the United Kingdom, the UK bank will provide details of interest payments on that account to the UK Inland Revenue. The Inland Revenue will in turn provide that information to the Spanish tax authorities. This is known as "automatic exchange of information" and enables the Spanish tax authority to compare the amount of income declared by that individual on his or her own Spanish personal tax return with the information provided under the EUSTD.
Although the EUSTD is centred on the automatic exchange of information, three EU Member States (Austria, Belgium and Luxembourg) have opted to apply a withholding tax instead. For these jurisdictions, this is the default position, where banks automatically withhold tax from interest paid to residents of other EU Member States.
No information is exchanged where the withholding tax is applied. However, customers of banks located in those jurisdictions will generally have the option of electing for exchange of information and thus continue to receive their interest payments gross.
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The EUSTD came into force on 1st July 2005 with a retention tax of 15% applicable on interest earned. On the 1st July 2008 the rate increased to 20%.
From 1 July 2011, the Isle of Man will be moving to automatic exchange of information. Automatic exchange of information is where details of your identity, residence and interest paid will be sent to the Manx tax authority for forwarding to the tax autority of the trelevant EU country.
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Although the Isle of Man is not part of the EU, it has voluntarily agreed (along with Jersey, Guernsey, Switzerland and a number of other non-EU jurisdictions) to apply similar provisions. The Isle of Man and Channel Islands have decided to follow the same withholding tax option as adopted by Belgium, Luxembourg and Austria. The law in the Isle of Man now incorporates a requirement for tax to be deducted as prescribed.
As Bradford & Bingley International is located in the Isle of Man, you have the option of electing for exchange of information as an alternative to having tax deducted at source on your interest.
The withholding tax mentioned by the Directive is known as the "retention tax" in Switzerland, the Isle of Man, Jersey and Guernsey.
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How does the EUSTD affect me?
That depends. It really comes down to where you live. If your residential address is from any of the 27 EU member states then you are likely to be affected.
For this reason it is very important that the details of your residential address (rather than any correspondence address) is up to date with us.
| Scenario 1: If you're not resident in an EU Member State and have a passport issued by a non EU Country (Isle of Man, Channel Islands and Switzerland are all classed as outside of the EU |
| If you are an individual not resident in an EU Member State and have a passport issued by a country outside of the EU Member States then you will be outside of the scope of EUSTD and your accounts with Bradford & Bingley International will be unaffected. |
| Scenario 2: If you're resident in an EU Member State |
| If you're an individual resident in an EU Member State and you receive interest payments on an account held with Bradford & Bingley International then you will be affected by the EUSTD. |
| Scenario 3: If you're not resident in an EU Member State but your passport is issued by an EU Member State |
If you are not resident in the EU, but hold a passport issued by an EU Member State then we will treat you as falling outside of the scope of the EUSTD on the evidence of the documentation you have provided to support your permanent residential address. We will treat you as unaffected by the Directive until such time as you move to live in an EU Member State.
The Isle of Man, Channel Islands, Switzerland and other named third countries and associate territories mentioned in the Directive are not part of the EU. Individuals who are resident in these jurisdictions for tax purposes are outside of the scope of the EUSTD and are not affected. |
| Scenario 4: If you're resident in an EU Member State but are not EU domiciled |
It is recognised that proof of non-domicile for tax purposes is generally difficult to obtain. We are unable to advise you on your domicile status. If you are unsure, your lawyer, accountant or financial adviser will be able to assist you in this matter.
If you are a non-EU domicile of an EU Member State for tax purposes, then we will treat you as exempt for the purposes of the EUSTD provided that you have completed an EUSTD Request For Exemption Form. It is possible that we may need to contact you for further supporting evidence of your status. This could take the form of a tax certificate or confirmation from your lawyer, tax office or accountant. |
| Scenario 5: Company and trust accounts |
If you have accounts held in a company structure or held in trust* then the interest payments on these types of account are currently outside the scope of the EUSTD and unaffected.
*"Interest in possession" trusts are subject to the Directive if the beneficiary is resident in the EU. We would ask you to inform us if your account is held by this type of trust. As a general guide, a trust is an interest in possession trust if a beneficiary has a present and absolute entitlement to receive the interest paid. If you are unsure as to whether your trust is this type, please ask your lawyer, accountant or financial adviser to clarify this for you, as we are unable to provide such advice. |
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If you fall in to one of the categories affected by EUSTD above, then your interest will be paid net of retention tax. The table below shows the amount of tax applicable as set by the EUSTD. Your account will be automatically set to receive retention tax if you fall in to one of the categories above. You can however elect for the exchange of information option or have certified your exemption to our satisfaction. (The following sections contain more information on these options.)
Retention tax rate applicable from 1st July 2008:
| Date |
Rate Applicable |
| 1st July 2008 - 30th June 2011 |
20% |
From 1 July 2011, the Isle of Man will be moving to automatic exchange of information. Automatic exchange of information is where details of your identity, residence and interest paid will be sent to the Manx tax authority for forwarding to the tax autority of the trelevant EU country.
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If you elect for exchange of information, then no tax will be deducted from interest payments made to you. Instead, details of your identity and residence, along with details of the amount of interest paid and the period to which it relates, will be provided to the Isle of Man tax authorities.
The Isle of Man tax authority will in turn provide this information to the EU Member State in which you are resident. It is our understanding that this exchange of information does not act as a substitute for your existing duty to disclose your interest payments; you will need to carry on submitting your interest earnings on your tax returns as appropriate.
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Yes. If you are resident for tax purposes in an EU Member State, then you can apply to your tax authority for a tax exemption certificate.
On receipt of this tax exemption certificate, we will make no deduction of retention tax, nor will any disclosure of your information be made.
It is understood that these tax exemption certificates may be difficult to obtain, although the EU Member State tax authorities are obliged to provide these certificates within 2 months of your request. In such instances, we would ask you to write to us detailing your understanding of your tax exempt status and provide us with copies of your request to your tax authority for your tax exemption certificate. In the absence of appropriate documentation from you, a retention tax will be applied to your interest payments unless you opt for the exchange of information.
Please bear in mind that these tax certificates have a maximum useful life of 3 years and apply only to the accounts specified on the certificate. A new account opened will require a new certificate. Electing for disclosure may be simpler for you.
Important note: Bradford & Bingley International's Internet based accounts, do not offer any alternatives to retention tax or exchange of information
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The retention tax will only be deducted when interest is capitalised to your account. So if you receive your interest annually, the retention tax will be detailed on your annual statement.
If you take a monthly interest payment on your account, then please be aware that your income will be net of the retention tax each month. Details of deducted tax will be itemised on your next statement.
If you hold a deferred interest savings account, the amount of retention tax deducted on account closure will reflect the rates of retention tax applicable during the life of the account. For example, interest accrued from 1 July 2005 to 30 June 2008 will have retention tax applied to the accrued interest, at the rate of 15% and then the interest accrued from 1st July 2008 until closure on 30 June 2011 will have the retention tax applied at the rate of 20%. From 1 July 2011, the Isle of Man will be moving to automatic exchange of information. Automatic exchange of information is where details of your identity, residence and interest paid will be sent to the Manx tax authority for forwarding to the tax autority of the trelevant EU country.
It may be appropriate to discuss the exchange of information option with your tax adviser. Please note we are not able to give individual advice in relation to accounts.
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No. On the basis that you are already declaring the interest received by you to your home tax authorities, these changes with have no impact upon the overall level of tax that you pay if you elect for exchange of information.
If retention tax is deducted from your account, you may request a tax paid certificate from us, which you can then present to your tax authority for crediting against your tax bill.
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Under the provisions of the EUSTD, we treat interest as being split equally amongst the account holders on an account.
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We split interest equally between all account holders. Where an individual account holder is affected by the EUSTD, then their portion of interest will have the retention tax applied unless they have opted for disclosure, provided a tax certificate or confirmed to us that they do not benefit from the interest on the account.
This last point can be particularly relevant where a person (such as a son or daughter) has been added to the list of account holders to make things simpler in the event of a death, but they do not benefit from the interest earned by the account.
We may ask for further supporting evidence before changing tax status for the individual concerned.
Important note: Bradford & Bingley International's Internet based accounts, do not offer this facility.
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These changes will have no impact upon customer confidentiality unless you elect for exchange of information. If you elect for exchange of information then relevant details regarding the account and the interest payment will be provided to the Isle of Man tax authorities who in turn will provide that information to the tax authorities of the EU Member State in which you are resident.
If you do not elect for the exchange of information option then no information regarding you or your Bradford & Bingley International bank account will be provided to either the Isle of Man tax authorities or the tax authorities of the EU Member State in which you are resident.
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No. The EUSTD also extends to a number of other forms of "saving income". These other areas are: interest from, and the proceeds of sale or redemption of, certain bonds and income from certain types of investment funds. Further details can be found at www.isleofmanfinance.com. Isle of Man Finance is part of the Isle of Man Government's Treasury division.
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What do I need to do next?
All you need to do to apply for exchange of information on your account is to complete an 'exchange of information' form which can be downloaded from our website or on request from our office. You will need to list all the account numbers of the accounts you wish this status to apply to on the form.
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You will need to contact your tax authority and ask them to provide a tax exemption certificate.
These certificates are valid for three years and the EUSTD states that the EU Member State tax authority should issue the certificate within two months of your request. It is your responsibility to ensure any certificates are current and cover all your accounts. If the certificate does not list all your accounts with us, then we will not be able to apply retention tax exemption to the accounts not listed on the certificate.
The alternative to applying to your tax authority for a certificate for each of the banks that you deal with is to opt for the exchange of information. This can be done once and does not require you to remember to re-validate your certificates.
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Retention tax is automatically applied to your accounts. There is no need to give an instruction for each of your accounts except International eSavings accounts which require online specific instructions.
Retention tax will be applied in the absence of an instruction from you. If you elect to have exchange of information, then we will apply this to all your accounts.
If you obtain a tax certificate from your tax authority, then your exempt status will be allocated to each of the accounts listed on the certificate.
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You may wish to consider closing your account and re-opening it, in order to capitalise your interest before changing jurisdiction. This is referred to as "bed and breakfasting" and we strongly recommend that you take advice from someone qualified to give such advice, such as your accountant, lawyer or financial adviser. We are unable to provide individual advice of this nature.
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Yes. We have interpreted the EUSTD and the resulting Isle of Man legislation using the Isle of Man Treasury's Guidelines. These are guidance notes and they can change over time. We, along with all other licensed institutions, must ensure that we are up to date with all regulatory requirements. Our interpretation of requirements may therefore change in future.
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If you need more information or wish to clarify any of the points above then just pick up the phone or send our customer service team an email.
Telephone: +44 (0) 1624 695000
Email: enquiries@bbi.co.im