Frequently Asked Questions


  1. Does this refer to me?
  2. What is the European Union Savings Tax Directive ("EUSTD" or "the Directive")?
  3. How does the EUSTD affect Jersey, Guernsey, Isle of Man and Gibraltar?
  4. When does the EUSTD take effect?
  5. Will it affect me?
  6. How will it affect me?
  7. How do I elect for exchange of information?
  8. Will these changes mean that I should pay more tax?
  9. How do these changes affect customer confidentiality rules?
  10. Does the EUSTD just relate to bank accounts?
  11. What if I have an investment in Lloyds TSB Offshore Funds?
  12. Will my Equity Linked Offshore Limited Edition Deposit (OLED) be affected by the EUSTD?
  13. Which countries does this apply to?
  14. I am a non-EU national living in the EU, does this affect me?
  15. Although I am resident in the UK, my offshore interest is only liable to UK income tax on a remittance basis. Does the Directive affect me?
  16. Although I reside in an EU country (including the UK), I pay income tax outside the EU. Does the Directive apply to me?
  17. I am an EU national living outside the jurisdictions above, does the Directive affect me?
  18. I am a resident in the EU but hold accounts outside of the jurisdictions mentioned above. How does the Directive affect those accounts?
  19. What action do I have to take?
  20. If applicable can I change my election at a later date?
  21. How will interest be apportioned for joint accounts?
  22. I have a joint account with a person/people who reside(s) in a country outside of the EU, how does the Directive affect us?
  23. Do companies come within the scope of the Directive?
  24. Do partnerships come within the scope of the Directive?
  25. Do sole traders come within the scope of the Directive?
  26. How does the Directive affect trusts and trustees?
  27. Are personal representatives and executors in scope?
  28. What if the Retention Tax is wrongly taken from me?
  29. I am registered NOR (Not Ordinarily Resident). Does this exclude me from the Directive?
  30. I already declare the income from my savings in my country of residence, what do I need to do/how does the Directive affect me?
  31. Is there a minimum amount that has to be earned before the Retention Tax is levied?
  32. Does the Directive affect all interest paid on my savings since I opened my account/became a customer i.e. retrospective?
  33. Will the Retention Tax always be in place or at a later date will you have to disclose all my details?
  34. How does the Directive affect new customers?
  35. Is Lloyds TSB Offshore Limited offering any products that fall outside the scope of the Directive?
  36. Can you offer me any tax advice as to what would be best for me?
  37. If I opt for retention tax, can I get a certificate of interest to pass to the Inland Revenue?
  38. I travel around the world and have no fixed abode, I have a UK address for post to be sent to. How does this affect me?
  39. Where can I go to find out more?

Q1: Does this refer to me?

A: This note applies to individuals and holders of joint accounts who are residents of European Union ("EU") Member States. Individuals resident outside the EU are generally not affected, although if you hold a passport issued by an EU Member State you should also read on.

Q2: What is the European Union Savings Tax Directive ("EUSTD" or "the Directive")?

A: The EUSTD is an agreement between the EU Member States to automatically exchange information with each other about customers who earn savings income in one EU Member State but reside in another. It was approved by the EU Council of Ministers on 3 June 2003 and came into effect from 1 July 2005.

The Directive can be applied in two ways:

Exchange of information:

This means that, for example, where a resident of France holds a bank account in Germany, the German bank will provide to the German Tax Authorities details of the customer and interest payments on that account. The German Tax Authorities will then in turn provide that information to the French Tax Authorities. This is known as 'automatic exchange of information' and enables the French Tax Authorities to compare the amount of income declared by that individual on his or her own French personal tax return with the information provided under the EUSTD.

Withholding tax:

Although the EUSTD is centred on 'automatic exchange of information', three EU Member States (Austria, Belgium and Luxembourg) have opted to apply a withholding tax instead. Under the withholding tax option, banks automatically withhold tax (initially at a rate of 15%) from interest paid to individuals resident in other EU Member States (but no information regarding individuals is provided to the Tax Authorities in either the State in which the individual is resident or the State in which the bank account is located). It is the Bank’s responsibility to pay the withholding tax on behalf of the customer. Under the withholding tax option the jurisdiction must also offer to customers automatic exchange of information and/or a system whereby the customer obtains from their local tax authority a certificate which details the source from which the interest payment arises.

Q3: How does the EUSTD affect Jersey, Guernsey, Isle of Man and Gibraltar?

A: Jersey, Guernsey, Isle of Man

Although these islands are not part of the EU, they have agreed (along with Switzerland and a number of other jurisdictions) to apply similar provisions. They have each decided to follow the same withholding tax option as adopted by Austria, Belgium and Luxembourg. Switzerland has also followed the withholding tax option.

The withholding tax option will be known in Jersey, Guernsey and the Isle of Man as a ‘retention tax’. This is to distinguish the Islands from the member States to reflect the fact that they are not part of the European Union and are not subject to the EUSTD.

Gibraltar

The withholding tax option is not available for Gibraltar based accounts.

Q4: When does the EUSTD take effect?

A: The EUSTD came into force on 1 July 2005.

Q5: Will it affect me?

A: If you are an individual resident in an EU Member State and you earn bank interest on an account held with a bank located in the Isle of Man, Jersey, Guernsey or Gibraltar, then you will be affected by the EUSTD. If you are resident outside the EU then you should fall outside the scope of the EUSTD even if you hold a passport issued by an EU Member State. However, you may be asked to provide proof that you are resident outside the EU.

If you are resident in the UK but were born elsewhere you may be non-domiciled for tax purposes on income not remitted into the UK. For additional information please see questions 14, 15 and 16.

Q6: How will it affect me?

A: If you are affected by these rules, and have a bank account in the Isle of Man, Jersey or Guernsey then interest accrued and paid to you will be paid net of 15% retention tax, unless you elect for the exchange of information option (see question 7). The rate of retention tax will increase to 20% from 1 July 2008 and 35% from 1 July 2011.

If you elect for exchange of information then no tax will be deducted from interest payments made to you. Instead, we will be obliged to advise details of your identity and residence, along with details of the level of interest received and your account number (or where there is none, the identification of the security which gave rise to the interest payment), to the Jersey, Guernsey or Isle of Man Tax Authorities, depending upon where your account is held. These Tax Authorities will then in turn provide this information to the EU Member State in which you are resident.

If your account is held in Gibraltar then Exchange of Information will automatically apply.

If you hold accounts in both Gibraltar and the Isle of Man, Jersey or Guernsey then Exchange of Information will automatically apply to all accounts.

Q7: How do I elect for exchange of information?

A: You will need to complete an Election to Disclose form. If you have not received one of these, but think you are affected, please contact our Helpdesk on +44 (0) 870 609 1869, or your usual contact.

Q8: Will these changes mean that I should pay more tax?

A: No, they should not. On the basis that you are already declaring the interest income to your home tax authorities, these changes will have no impact upon the overall level of tax that you pay. If interest payments to you are made net of the 15% retention tax then this tax will be available for credit (i.e. offset) against your tax liability in the EU Member State in which you are resident.

Q9: How do these changes affect customer confidentiality rules?

A: If your account is held in the Isle of Man, Jersey or Guernsey these changes will have no impact upon customer confidentiality unless you elect for the exchange of information option. If you elect for exchange of information then relevant details regarding you, the account and the interest payment will be provided to the Isle of Man, Jersey or Guernsey Tax Authorities who in turn will provide that information to the tax authorities of the EU Member State in which you are resident.

If your account is held in Gibraltar the information detailed above will automatically be provided to the Gibraltar Tax Authorities.

If you hold accounts in both Gibraltar and the Isle of Man, Jersey or Guernsey then Exchange of Information will automatically apply to all accounts.

Q10: Does the EUSTD just relate to bank accounts?

A: No, the EUSTD also extends to a number of other forms of 'savings 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.

The Directive will affect:

  1. Interest paid or credited to accounts
  2. Interest rolled up when the balance is repaid
  3. Interest paid out on debt-claims (This would include all UK Government securities and certain other types of bonds)
  4. Interest accrued and paid out on (c) above when such debt-claims are sold (e.g. when a UK Government security is sold the accrued interest portion of the sale proceeds will be savings income for the purposes of the Directive)
  5. Distributions made by certain unit trusts and other open ended collective investment funds which have invested more than 15% of their investments in debt claims
  6. Accumulated income paid out when units in certain collective investment funds that have invested more than 40% of their investments in debt claims are redeemed, repaid or sold (this percentage will reduce to 25% from 2011).

Q11: What if I have an investment in Lloyds TSB Offshore Funds?

A: Certain investment schemes do come within scope of the Directive but as dividends and redemption payments are indirectly made by Lloyds TSB Offshore Fund Managers Limited from outside of the EU and the Crown Dependencies, we will not need to retain tax from these payments or exchange information about them. As such, you are not required to take any further action. If this position changes we will let you know as soon as possible.

Q12: Will my Equity Linked Offshore Limited Edition Deposit (OLED) be affected by the EUSTD?

A: We believe that these types of Structured Products will not be caught under the Directive and therefore will not be affected, however it is possible that this situation may change at a later date.

Q13: Which countries does this apply to?

A: Member states of the EU, that are applying the Directive are:

UK, Ireland, France, Germany, Netherlands, Spain, Portugal, Italy, Greece, Denmark, Sweden, Finland, Estonia, Latvia, Lithuania, Poland, Czech Republic, Slovakia, Hungary, Slovenia, Malta, Cyprus, Bulgaria and Romania.

Non-EU countries that are effectively abiding by the directive are:

Antilles, Gibraltar and dependent territories in the Caribbean (including Cayman Islands).

Countries that will be applying Retention Tax are:

Andorra, Monaco, Liechtenstein, San Marino, Belgium, Luxembourg, Austria, Switzerland, Jersey, Guernsey and the Isle of Man.

Q14: I am a non-EU national living in the EU, does this affect me?

A: If you are resident in an EU country, regardless of your nationality, you will be in scope of the Directive if you maintain savings products in another EU country, or some 3rd countries which includes Jersey, Guernsey, the Isle of Man, Gibraltar and Switzerland.

Q15: Although I am resident in the UK, my offshore interest is only liable to UK income tax on a remittance basis. Does the Directive affect me?

A: If you reside in the UK but have non-domiciled status there, the EUSTD may apply. You must advise us of your tax status. To do this, please contact the Helpdesk on 0870 609 1869 (or +44 (0)870 609 1869 from overseas) or your relationship manager. Helpline opening hours are Monday to Friday, 9am to 5pm UK time.

Q16: Although I reside in an EU country (including the UK), I pay income tax outside the EU. Does the Directive apply to me?

A: In these circumstances the EUSTD may not apply to you but you must advise us. To do this please contact the Helpdesk on 0870 609 1869 (or +44 (0)870 609 1869 from overseas) or your relationship manager. Helpline opening hours are Monday to Friday, 9am to 5pm UK time.

Q17: I am an EU national living outside the jurisdictions above, does the Directive affect me?

A: No, you are not affected.

Q18: I am a resident in the EU but hold accounts outside of the jurisdictions mentioned above. How does the Directive affect those accounts?

A: Accounts held in countries other than those listed in Q13 above, will not be affected by the Directive.

Q19: What action do I have to take?

A: If, according to our records, you are in scope of the Directive and your account is held in the Isle of Man, Jersey or Guernsey. You have three options:

  • Opt to 'Exchange Information' – payments of interest are to be reported to the tax authority in the country in which the beneficial owner resides (within the EU). This will only take place if you complete an Exchange of Information Authority.
  • Do nothing – Retention Tax will then be applied.
  • If you are exempt due to your tax status please see questions 15 and 16 above.
  • If your account is held in Gibraltar you need take no action as "automatic exchange of information" will apply unless you are exempt due to your tax status. Please see questions 15 and 16.
  • If you hold accounts in both Gibraltar and the Isle of Man, Jersey or Guernsey you need take no further action as "automatic exchange of information" will apply to all accounts unless you are exempt due to your tax status. Please see questions 15 and 16.

Q20: If applicable can I change my election at a later date?

A: You can change your election but we will require your written consent. Please bear in mind that if you are paying Retention Tax, and the tax has already been paid away by the time we receive your written consent, it may not be possible to reclaim that tax back.

You must also be aware that if you change your election to 'Exchange Information', the information exchanged will be based on the full financial year. This means it will not take into account any previous deductions of Retention Tax in that financial year.

Q21: How will interest be apportioned for joint accounts?

A: Interest will be apportioned equally between the parties on a joint account.

Q22: I have a joint account with a person/people who reside(s) in a country outside of the EU, how does the Directive affect us?

A: If applicable Lloyds TSB Offshore Limited will give each individual customer the option to exchange information, or pay the Retention Tax, on their portion of interest only.

Therefore if one party is in scope of the Directive but another party on the same account isn't, the tax will be taken or information exchanged only on the portion of interest that applies to the party(ies) that is/are in scope.

Q23: Do companies come within the scope of the Directive?

A: The Directive only applies to individuals. Therefore, legal entities and those entities whose profits are taxed under the general arrangements for business taxation are not in scope of the Directive.

Q24: Do partnerships come within the scope of the Directive?

A: For the purposes of local interpretation of the Directive domestic partnerships, foreign partnerships and limited partnerships are considered to be entities whose profits are taxed under the general arrangements for business taxation and are thus not in scope of the Directive.

Q25: Do sole traders come within the scope of the Directive?

A: As the Directive applies to individuals, sole traders will be in scope.

Q26: How does the Directive affect trusts and trustees?

A: If the trustee were a corporate or not resident within an EU member state they would not be subject to the Directive. However, as in the case of an interest in possession trust, if a beneficiary has the immediate and absolute entitlement to the trust income and is an individual resident in an EU member state, the trustee will be deemed to be the paying agent if he is resident in Jersey, Guernsey, the Isle of Man or Gibraltar. The beneficiary will be the recipient of the income which, if savings income arising at trust level, will be within the scope of the Directive.

Q27: Are personal representatives and executors in scope?

A: Interest earned on funds held in the estate of a deceased person during the Administration or Executorship are not subject to Retention Tax or Reportable. Such funds are Out of Scope of the Directive until assigned to a beneficiary in an EU Member State.

Q28: What if the Retention Tax is wrongly taken from me?

A: If the residential address we hold for you is incorrect and tax has been deducted from your account when you are not in scope of the Directive, the tax will be repaid into your account as soon possible.

Q29: I am registered NOR (Not Ordinarily Resident). Does this exclude me from the Directive?

A: If your residential address is in an EU Member State then regardless of the fact you have signed a NOR declaration, the retention tax will apply to your interest payments unless you have opted for exchange of information.

Q30: I already declare the income from my savings in my country of residence, what do I need to do/how does the Directive affect me?

A: If you wish to continue to receive interest without the deduction of Retention Tax you should opt for exchange of information. If you do nothing and the tax is deducted we can provide a certificate of interest paid in order for you to claim a refund or tax credit from your home tax authority.

Q31: Is there a minimum amount that has to be earned before the Retention Tax is levied?

A: No, there is no minimum amount.

Q32: Does the Directive affect all interest paid on my savings since I opened my account/became a customer i.e. retrospective?

A: The Directive is not retrospective.

Q33: Will the Retention Tax always be in place or at a later date will you have to disclose all my details?

A: These are transitional arrangements but no date has been set to move entirely to exchange of information and these arrangements are likely to be in force for a considerable number of years.

Q34: How does the Directive affect new customers?

A: New customers who are in scope of the Directive (i.e. they reside in an EU country) and hold accounts in the Isle of Man, Jersey or Guernsey will be asked if they would prefer to exchange information with their tax authority, otherwise the Retention Tax will be taken.

New customers with accounts held in Gibraltar "automatic exchange of information" will apply.

Q35: Is Lloyds TSB Offshore Limited offering any products that fall outside the scope of the Directive?

A: You should speak to your usual contact, who can give you details of the range of products we offer so that you can choose which ones best suit your requirements.

Q36: Can you offer me any tax advice as to what would be best for me?

A: No, we are not qualified to offer tax advice. If you have questions on your tax position we recommend you consult your tax adviser.

Q37: If I opt for retention tax, can I get a certificate of interest to pass to the Inland Revenue?

A: Yes, please let us have your request in good time for you to include with your tax return.

Q38: I travel around the world and have no fixed abode, I have a UK address for post to be sent to. How does this affect me?

A: It is very rare for anyone not to have a tax authority. Even if you are not paying tax, you probably do have one. However, it will be down to you to prove you do not have one by sending us confirmation from your tax advisor or previous tax authority.

Q39: Where can I go to find out more?

A: Please speak to your relationship manager or call the Helpdesk on 0870 609 1869 (or +44 (0)870 609 1869 from overseas). Helpline opening hours are Monday to Friday, 9am to 5pm UK time.

The following websites may also be useful:

Please note – this document only provides a summary of the key points relating to the EUSTD on bank accounts and should not be regarded as a comprehensive statement of the impact of the EUSTD.

If you are in any doubt about the impact of these changes on your personal position you should contact us or your usual professional adviser.