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EU Savings Tax Directive: the market's response

Datamonitor
October 6, 2004
34 Pages - SKU: DFMN1054998

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Countries covered: Europe

EU Savings Tax Directive: the market's response

Introduction
Drawing on the results of Datamonitor's Offshore Market Leaders Survey of 95 offshore financial services companies about the impact of the impending EU Savings Tax Directive, this report analyzes what companies are doing to inform customers and to develop products and services to mitigate the Directive's effects.

Scope
Analyzes the definition of the EU Savings Tax Directive to understand the extent of its coverage
Presents the results of Datamonitor's Offshore Market Leaders Survey 2004 to provide insight into how providers view the Directive
Summarizes the ways in which financial services companies can mitigate its effects
Analyzes the extent to which wealth managers have pursued various mitigation strategies and suggests how others should react
Highlights
The opening paragraph of the European Savings Tax Directive makes reference to a number of key terms. Taken in turn, these are 'interest payments', 'individuals' and 'another member state'. Upon closer inspection, each offers wealth managers scope to mitigate the Directive's effects on their clients.

The Directive is clearly seen as a negative event for jurisdictions within its remit. Results from Datamonitor's Offshore Market Leaders Survey 2004 show the Directive to be considered the single biggest threat to offshore revenues over the next two years. Over half of the industry harbors serious concerns that it will drive assets onshore.

The market has responded to the Directive along three broad themes. These are: by augmenting their existing product portfolio; by developing their ability to offer trust and company structures; and by putting in place an ability to manage assets from other jurisdictions.

Reasons to Purchase
Aids understanding by providing a comprehensive point of reference on what the Directive is and what it aims to achieve
Offers competitor intelligence on the different ways in which wealth managers are reacting to the Directive
Supports strategic planning by outlining the ways in which the Directive's effects may be mitigated and how different players should react

TABLE OF CONTENTS
Introduction 7
Scope of the EU Savings Tax Directive 8
Its objectives and key terms 8
“Savings income in the form of interest payments” 8
“Beneficial owners who are individuals” 9
“Resident for tax purposes in another Member State” 10
Timing of implementation 12
Attitude of offshore providers 14
What effect are offshore providers anticipating from the Directive? 14
How does it compare to other competitive pressures? 15
Should customers be told of its implications? 17
Approaches to mitigating its effects 19
Augmenting the existing product portfolio 19
Developing trust and company structures 22
Managing assets from other jurisdictions 24
Appendix 29
Data tables 29
Offshore Market Leaders Survey 31
Further reading 32
SPP Team 34

LIST OF TABLES
Table 1: Geographical scope of the EU Savings Tax Directive 11
Table 2: What will be the biggest threat to offshore revenues in your jurisdiction in the next two years? 29
Table 3: What will make it hardest for competitors in your jurisdiction to gain more offshore clients in the next two years? 30
Table 4: What impact do you think the EU Savings Tax Directive will have on your jurisdiction? 30
Table 5: Have you formally communicated the EU Savings Tax Directive and its implications to your clients? 31
Table 6: If you have not yet communicated the EU Savings Tax Directive and its implications to your clients, do you plan to do this formally? 31

LIST OF FIGURES
Figure 1: Aim of the EU Savings Tax Directive 8
Figure 2: Offshore providers overwhelmingly expect the EU Savings Tax Directive to have a negative impact on their jurisdictions 15
Figure 3: The EU Savings Tax Directive is widely recognised as the biggest threat to offshore business in the next two years among those jurisdictions directly affected 16
Figure 4: Very few competitors in jurisdictions directly affected by the EU Savings Tax Directive intend not to formally communicate its implications to their clients 17
Figure 5: Timeline of recent major competitor news within Singapore private banking, Sept 2004 26

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EU Savings Tax Directive: the market's response

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