The EU’s Savings Tax Directive designed to increase cooperation on tax matters between EU countries came into effect on July 1. Separate savings tax agreements with five other European countries also came into effect on Friday.

The Directive imposes exchange-of-information requirements on 22 of the EU’s 25 member states. Effectively, they are required to provide information to their counterparts on interest paid to individual taxpayers resident in other member states. Austria, Belgium and Luxembourg opted to apply a withholding tax – for a transitional period – on interest income paid to individual taxpayers in other EU member states.

Five other countries have entered into separate savings tax agreements. Andorra, Liechtenstein, Monaco, San Marino and Switzerland, will apply a retention tax, but reportedly have agreed to exchange information on the request of tax authorities of EU member states in all criminal or civil cases of tax fraud.