A typical example includes a scenario where a BVI company with a Swiss bank account and Swiss directors pays interest to an EU resident. That transaction will attract either withholding tax at 35% or the automatic reporting of the beneficial owner information. Any interest payment to an untaxed entity or legal arrangement managed within the savings tax territory in another country, even if beneficiary is a non-EU resident.

Life insurance and payments of benefits under certain life insurance policies is also addressed in the amended EUSD.

Even non-EUSD jurisdiction IBCs or zero tax vehicles are roped into the directive if the IBC is effectively managed in the EU for example the trustees or even company nominees are based in the EU. Jurisdictions like Panama, Belize, Barbados, Hong Kong and Singapore all suffer the same fate. Where zero tax entities incorporated in these jurisdictions are effectively managed in the EU and payments are being made to apply the savings directive.

If the banking jurisdiction has banking secrecy but the IBC or offshore trust or foundation is effectively managed in the EU the EUSD applies.

For more information go to: http://cititrust.biz/blog/?p=415