Part 1 - AL-Tax

International Taxation Handbookbe living in a country different than that listed in his or her passport has to present a certificateof residency issued by the third country.20. The country list is determined by the availability of data on external deposits of nonbanksand therefore cannot be exhaustive. Note that it covers nine of the 35 tax havens on the OECDblacklist and 14 on the list of tax havens compiled by Hines and Rice (1994). Nevertheless,the sample is big enough to support the case of less than complete country coverage of the EUsavings tax.21. Information sharing applies only to bonds issued after March 2001 with a view to protect London’seurobond market.22. No estimates are available on the size of these substitution effects. The European Commission,however, is committed to extend the scope of the directive if these effects were to turn outlarge.23. A notable exception is Huizinga and Nicodème (2004), who investigated whether informationexchange has had a negative effect on international depositing patterns. They cannot find a significanteffect, however, raising doubts about the effectiveness of information sharing. Note,however, that their analysis may have been affected by a simultaneity problem. Informationsharing itself is likely to be a function of capital flows.ReferencesBacchetta, P. and Espinosa, M.P. (1995). Information Sharing and Tax Competition AmongGovernments. Journal of International Economics, 39:103–121.Bacchetta, P. and Espinosa, M.P. (2000). Exchange-of-information Clauses in International TaxTreaties. International Tax and Public Finance, 7:275–293.Bank for International Settlements (BIS) (2006). Locational Statistics, Tables 3A-B. Internet:http://www.bis.org/statistics/bankstats.html.Bucovetsky, S. and Wilson, J.D. (1991). Tax Competition with Two Tax Instruments. RegionalScience and Urban Economics, 21:333–350.Diamond, P. and Mirrlees, J.A. (1971). Optimal Taxation and Public Production. II: Tax Rules.American Economic Review, 61:261–278.Eggert, W. and Kolmar, M. (2002a). Information Sharing, Multiple Nash Equilibria, and AsymmetricCapital-tax Competition. EPRU Working Paper Series No. 02-01. EPRU, Copenhagen.Eggert, W. and Kolmar, M. (2002b). Residence-based Capital Taxation in a Small Open Economy:Why Information is Voluntarily Exchanged and Why it is Not. International Tax and PublicFinance, 9:465–482.Eggert, W. and Kolmar, M. (2004). The Taxation of Financial Capital Under Asymmetric Informationand the Tax Competition Paradox. Scandinavian Journal of Economics, 106:83–105.European Commission (1989). Tax Measures to be Adopted by the Community in Connectionwith the Liberalization of Capital Movements: Proposal for a Council Directive on a CommonSystem of Withholding Tax on Interest Income, COM (89) 295 final. European Commission,Brussels.European Commission (1998). Proposal for a Council Directive to Ensure a Minimum of EffectiveTaxation of Savings Income in the Form of Interest Payments Within the Community, COM (98)295 final. European Commission, Brussels.264