After 13 laborious years, a shoddy compromise finally sealed the EC Savings Tax Directive in January. The objective, to which all EU states signed up in the Helsinki Principles, was that “all EU citizens would pay the proper rate of tax on their savings income”. From the outset, two ways of achieving this were under discussion:
1. Withholding taxes administered in the country where savings income arose;
2. Automatic exchange of information between revenue authorities to encourage their citizens to make honest tax returns.
