EUS Directive
Background
Beginning July 1, 2005, the EU Savings Directive (the “Directive”) was implemented. According to the legislative background, (Council Directive 2003/48/EC of 3 June 2003) it seeks to ensure that individuals resident in an EU Member State who receive savings income from another Member State are taxed in the Member State in which they are resident for tax purposes.
Broadly, the Directive applies when a “paying agent” based in an EU Member State or an EU dependency pays savings income in the form of interest payments to individual beneficial owners (whether business related or not) resident in another EU Member State. The paying agent is required to collect and report personal details of the payee and the interest payments to its local tax authority. Paying agents in Austria, Belgium, Luxembourg and Switzerland will levy a withholding tax on such interest payments, (calculated using the taxable income per share figure) rather than by submitting a report.
The paying agent is the last economic operator (a person who operates in the course of its business or profession) in a chain of payments that makes payments or secures interest for the immediate benefit of the beneficial owner; there can only be one paying agent in relation to any given owner. The definition of a paying agent is wide enough to include payments made by banks and deposit takers, brokers, custodians, investment funds, private equity funds and hedge funds.
Summary
The AXA Rosenberg Equity Alpha Trust (“the Trust”) is deemed to be out-scope for the purposes of the Directive on the basis the Trust meets the 15% asset test rule and 40% rule.40% rule:
Where an investment undertaking has invested more than 40% of its assets, either directly or indirectly in interest bearing securities, the entire income will be considered to be an interest payment for the purposes of the Directive and therefore reportable under the legislation.
Based on the investment policy included in the legal supplement of each underlying sub-fund, the sub-fund “…will primarily (meaning not less than 75% of the Net Asset Value) invest in equity securities…”, all the underlying sub-funds and their classes of the AXA Rosenberg Equity Alpha Trust are out-scope.
15% rule:
Any Irish resident authorised UCITS or deemed UCITS that has invested more than 15% of its assets in interest bearing securities should treat any periodical income payment or distribution it makes to its investors as an interest payment for the purposes of the Directive.
Based on asset test conducted at sub-fund level and on semi-annual or fiscal year end basis, all the underlying sub-funds and classes of the AXA Rosenberg Equity Alpha Trust are out-scope.
Publication
The status of the AXA Rosenberg Equity Alpha Trust in relation to the EU Savings Directive is available at least on a fiscal year end basis in:- Third parties’ databases such as Bloomberg, Lipper, WM, Fininfo, Telekurs, OEKB, FT interactive Data.
- Fiscal year accounts.
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