Multinational Employers Take Note: EU Enlargement Has Some Changes in Store for You and Your Expatriates
by Scott Shaughnessy, KPMG LLP's Washington National Tax practice, Washington, D.C.
(KPMG LLP in the United States is a KPMG International member firm)

The European Union (EU) is about to undergo its grandest enlargement ever on May 1, 2004, with the admission of 10 new countries: Poland, Hungary, the Czech Republic, Slovakia, Slovenia, Estonia, Latvia, Lithuania, Malta, and Cyprus (collectively known as “the accession countries”). The last enlargement of the EU occurred in 1995 with the admission of Sweden, Finland, and Austria.

Each of the accession countries’ governments had been involved in lengthy and difficult negotiations with the European Commission (the “Commission”) and the existing member states to ‘secure’ under the best possible terms their entry into the EU. Throughout 2003, nine of the 10 accession countries put their accession to the EU to popular referenda, which essentially “ratified” the terms of entry and membership (Cyprus ratified the accession treaty according to its own domestic procedures). In the run-up to the treaty¹ signing, and membership on May 1, 2004, the accession countries have been busy altering their domestic laws and practices to conform with EU laws and practices. They have been obliged to make changes in their social, labor, immigration, customs/tax, and financial laws, among others. Indeed, the Commission has been regularly monitoring the accession countries’ ‘state of preparedness’ for EU membership.²

The accession countries are obliged under the terms of the accession treaty to adopt and implement the full acquis communautaire from the first day of EU membership. The acquis communautaire represents, basically, the laws and rules as codified in EU directives, treaties, etc. of which there are 29 chapters. In some areas, and depending on the country, there are permissible delays and transitional arrangements. In other areas, such as regarding introduction of the euro, the timetable and rules are more flexible. Some countries may choose to replace their national currencies with the euro, others may choose not to do so.³

The ‘state of preparedness’ referred to above, which is being monitored by the Commission, concerns the degree to which the accession countries have altered their domestic laws and procedures in each chapter in terms of 1) transposing EU law into domestic law, and 2) creating infrastructure and procedures for implementation, administration, and enforcement.

Below, we discuss some of those areas of the acquis that pertain to international executives and their multinational employers, and will highlight the progress in these areas, drawing on information in the EU’s monitoring reports. (This will not entail a detailed discussion of EU law.)

Free Movement of Workers

The free movement of workers within the EU is one of the most sensitive areas for both the existing member states and the accession countries. There are many “penumbra” that attach to the free movement of workers⁴: employment, social welfare benefits and housing, immigration, taxation, etc. Typically, accession countries want immediate and unfettered access for their citizens and workers to the existing member states. Nevertheless, the politics and economics (and in some cases latent xenophobia) in existing member states may erect barriers to such immediate access. High unemployment rates, onerous social welfare burdens in older member states, and the much-popularized “myth” of hordes of immigrants arriving from the east, have given some politicians and their constituents pause regarding the immediate implementation of the free movement acquis.

Several existing member states have imposed new restrictions on immigration from the 10 accession countries. Some of these restrictions concern the rights of immigrants to welfare benefits in the host (existing) member state.⁵ While the U.K. and Ireland remain the only existing member states not to impose restrictions on access to their labor markets, some, including the U.K. and Ireland, will impose rules concerning the ability of migrant workers from accession countries to claim social welfare benefits – other countries may follow suit with similar benefits restrictions.

As noted in the EU’s “Free Movement for Persons – a Practical Guide for an Enlarged European Union”⁶, once a worker moves to another EU member state, he or she has certain rights as follows:

• An EU citizen has the right to work in another member state without a work permit (subject of course to the transitional arrangement described).
• Equality of treatment in employment matters as compared to nationals.
• Workers are entitled to the same social and tax advantages as nationals. They are also entitled to enjoy all the rights and benefits accorded to national workers in matters of housing. In practice this means that workers from another member state can apply for social housing and are entitled to purchase housing. As regards social and tax advantages, it means that nationals cannot be better treated than workers from other member states.
• The worker’s family, whatever its members’ nationalities, is entitled to join him or her (more on this below).
• Full coordination of social security (more on this point later). By this the following is meant:
  • The exportation of pension rights and other benefits – rights acquired by a worker must be maintained by a worker as he/she moves from one member state to another.
  • Aggregation – social security insured periods in different countries are added together so that there will be no shortfall in entitlement if the worker moves from one country to another. (Entitlement signifies the right to claim a particular benefit.)
  • Equality of treatment – in particular, the worker’s family is entitled to receive family allowances on the same basis as nationals.
• Community rules on mutual recognition of professional qualifications will apply fully (more on this later).

Special Arrangements for Accession Countries: a Transitional Period
Special arrangements are in place that provide for the gradual, or transitional, application of the free movement of workers acquis. While the general right to free movement and residence within the EU for EU citizens is immediate and broadly applicable, movement between member states for purposes of work is “restricted” for up to seven years.

For the most part, the current system which subjects citizens from the accession states to work permit and registration rules will continue to apply for those who wish to sign an employment contract with or be hired by an employer in one of the existing member states. For the first two years after accession, workers from accession countries will be admitted to existing member states for employment purposes under national rules rather than EU rules – generally, this means work permits and registration will continue to be required for up to two years following accession. (To date, none of the accession states has requested a transitional period for workers entering their labor markets from other accession countries.) The following guidelines and timeframes then apply:

• After two years, the Commission will report on the situation and member states must declare what rules they wish to implement (e.g., free movement, continued restrictions, or some status or phase in-between). Countries may maintain a “safeguard” which is broadly applied or applicable to certain professions/sectors only.
• Five years after accession, any member state that still imposes restrictions, will be required to lift them, thereby allowing accession countries’ workers right of free movement. However, if a country can show just cause (i.e., serious disturbance in their labor market), they may obtain special dispensation for continuing restrictions.
• Seven years after accession, all remaining restrictions must be removed (e.g., no work permit requirements permitted for workers in EU member states).

The transitional arrangements on free movement of workers do not apply to Malta and Cyprus. However, according to a December 2003 EU report on Freedom of Movement for Persons,⁷ Malta, concerned that its labor market could come under pressure following accession, has asked for a safeguard clause, which will be operative for seven years. Cyprus will enjoy full and free movement or workers in respect of existing member states (and vice-versa) from May 1, 2004.

Workers from accession countries already working in existing member states – during the transitional period – will be covered by EU rules on equal treatment in working conditions, tax, and social security.

Family Members of Workers
According to the EU’s “Free Movement for Persons – a Practical Guide for an Enlarged European Union,” members of the family of a worker already living in a member state (current or future) at the time of accession, shall have the “right to install themselves with the worker, and shall have immediate access to the labor market of the host member state. Members of the families of workers arriving later shall be given progressive rights, consistent with the general arrangements outlined above – the precise arrangements will be further specified in the Accession Treaty.” When transitional arrangements are terminated and the full acquis applies, family members, whether EU nationals or not, will have the right to move with the worker and to have access to the labor market of the member state to which they move.

Residence Rights
The EU does not distinguish between temporary or permanent residence; although many members states do, and they have different processes and rules in place governing each. Nonetheless, under EU law, an EU citizen has the right of residence in another member state, as long as he or she fulfills the conditions related to the right of residence. There are generally administrative formalities tied to acquiring residence permits in various countries. Generally, the only documents that can be requested of a worker in order to issue a residence permit are the document with which he or she entered the country (passport or identity card) and proof of employment. (For further information, see: http://citizens.eu.int. In addition, further information on residence rules for countries in the EU (and elsewhere), may be found in KPMG’s Planning Your International Secondment publications (at: http://www.us.kpmg.com/microsite/Global_IES/PYIS/index.html) or visit the following EU Web site: http://citizens.eu.int.

The EC Treaty (Article 8a) lays down the principle of the right of citizens of the European Union to move and reside freely within the territory of the member states, subject to certain conditions. Relevant EU legislation in this field includes: 1) for employees (Regulation 1612/68 and Directive 68/360), and 2) for the self-employed (Directive 73/148) – among others that cover other categories of persons. Every citizen of the EU who intends to reside for more than three months in another member state is required to have a residence permit. (There are some exceptions and nuances to the rules, for example, Danish or Finnish citizens, moving to Sweden, do not need to apply for a residence permit, as a result of the Nordic Agreement, or with respect to European Economic Area (EEA) countries like Switzerland.) The residence permit, which serves only to confirm the right of residence enjoyed by all EU citizens, is issued on presentation of certain documents, which vary according to the circumstances of the person making the request.

EU nationals are entitled to a residence permit, except in certain outstanding circumstances, e.g., the individual is deemed to be a threat to public order or public security or if the individual constitutes a public health risk.

Monitoring Progress
According to the EU’s Monitoring Report on progress in the accession countries, up to September 2003, all countries, except Cyprus, had “substantial work” remaining to eliminate or change national measures that conflict with EU rules on free movement and to introduce the principle of mutual recognition. Poland, Slovakia, and Cyprus, as of September 2003, still had some ways to go to align their national laws with EU’s visa policy. Moreover, Latvia and Lithuania were highlighted as not having made enough effort to align their immigration policies with EU policy.

Mutual Recognition of Qualifications
An important element of the free movement for workers principle and the smooth operation of the internal market is the body of rules concerning mutual recognition. People from accession countries already have the right to set up a business (a company or self-employment) in the existing member states. Under the mutual recognition rules, member states – although possessing different standards, criteria, and training, educational, and certification procedures for professions – must recognize as equal, the qualifications, certifications, and professional titles of similar professionals, no matter where they are from in the EU. Important aspects of mutual recognition are:

• Discrimination is avoided, and
• The integrity of professions and the safety of citizens are protected.

The EU’s approach has been to apply the principles of declaration and attestation requiring a declaration by relevant candidate country bodies of the equivalence of the qualifications in question to their “diplomas” accompanied by an attestation that the holders of the qualification in question have recently been engaged in the particular professional activities.

From May 1, 2004, the EU rules governing mutual recognition of professional qualifications will apply. Please note that the application of EU mutual recognition rules will be automatic from May 1, 2004, for most professions, but not all.

Information on mutual recognition rules in the EU can be found at: http://europa.eu.int/comm/dgs/internal_market/index_en.htm.

Monitoring Progress
According to the EU’s Monitoring Report, the Czech Republic, Estonia, Latvia, Lithuania, Poland and Slovenia are significantly delayed in introducing minimum training requirements and mutual recognition rules for a number of professions including health-care professions. Their standards and rules, so far, fall short of meeting the standards, structures, and level of competence required by EU directives. This means that professionals in the concerned sectors may not meet the minimum requirements to practice their profession in the other accession countries or in existing member states.

Social Security

According to EU rules on the coordination of social security, EU member states’ citizens are entitled to old age pensions, sickness and unemployment benefits, and family and maternity benefits, regardless of where they live or work in the EU. Another aspect of EU social security rules concerns the payment of social security contributions by cross-border workers as set down by EU regulations (e.g., Council Regulation (EEC) No 1408/71 of 14 June 1971, as amended). The purpose of Regulation 1408/71 is two-fold: 1) to avoid situations where workers have no social security coverage, and 2) to avoid situations where workers experience double social security contributions. Nevertheless, there are a limited number of exceptions, i.e., statutory directors.

These social security rules will be applicable from May 1, 2004, in the accession countries; therefore, from that date, the accession countries will be bound by EU coordination rules for social security.

From a cross-border perspective, essentially, nationals of all EU member countries and third-country nationals who move between two or more EU countries for self-employment or employment activities are covered by EU rules on social security. Under these rules, generally, a person (employed or self-employed) pays social security contributions in only one country, regardless of how many EU countries he or she works in or where he or she lives. Basically, EU rules establish to which country the individual will owe social security contributions; it is typically the country of employment. However, exemptions are possible under conditions that would allow the individual in the host country to retain the system of his or her home country.

On December 1, 2003, EU employment ministers reached an agreement on social security involving simplifying and updating the rules for cross-border social security claims contained in the existing Regulation 1408/71.⁸ Providing some of the outstanding issues are resolved, the proposed regulation is expected to enter into force in 2006 (it needs to be endorsed by the European Parliament).

Monitoring Progress
Administrative structures and procedures must be put in place in order to adequately apply the social security acquis. According to the EU’s Monitoring Report, candidate countries have confirmed their readiness to assume obligations relating to coordinating the various social security schemes.

Taxation

Taxation is an area that remains, to this day, largely the domaine reservé of national governments. However, in order to apply the principles and rules embodied in the treaties and to promote the single market, the Commission has developed a body of rules and practices that comprise the taxation acquis, but which focuses largely on indirect taxation (e.g., VAT and excise duties), but also on direct taxation and mutual assistance and information exchange.

For the most part, national tax systems in the accession countries must be aligned with EU rules. However, in some cases (Estonia, for instance), through negotiations, a country may be granted a transitional period to bring its tax legislation – or aspects of its tax legislation – in line with the acquis. (For related coverage, see “EU Enlargement Tax News,” a KPMG International publication in collaboration with KPMG’s European Tax Center and KPMG Central & Eastern Europe.)

As mentioned above, although tax law, for the most part, remains the domain of national governments within the EU, some tax matters have become the subject of greater harmonization and coordination at the EU level. As concerns cross-border workers, for example, in the realms of social security and pensions taxation, and other direct tax matters, the Commission and the European Court of Justice (ECJ) have taken action compelling member state governments to abolish or alter tax laws that:

• subject EU citizens working in another member state to double taxation and/or
• discriminate against another member state’s citizens in favor of its own nationals.

For example, the ECJ gave its judgment on May 16, 2000, in the case of Patrick Zurstrassen v. Administration des contributions directes (C-87/99), ruling that the Luxembourg residence criterion of both spouses (where the one worked and resided in Luxembourg and the other, who was caring for the children, resided in Belgium) for the application of a joint assessment was incompatible with article 39 of the EC treaty and article 7 (2) of the regulation 1612/68 of the free movement of workers. Luxembourg had treated Mr. Zurstrassen as a single taxpayer (tax class 1) as both spouses had to be resident in Luxembourg to benefit from the joint assessment.⁹

And in December 2003, the Commission formally requested Belgium, France, Spain, and Portugal change their tax legislation and give pension contributions paid to pension funds located in other member states the same tax treatment as contributions to domestic funds.¹⁰ The Commission claims that under existing Belgian, French, Spanish, and Portuguese legislation, pension contributions paid to foreign funds are not tax deductible while contributions paid to domestic funds are. The Commission considers that preferential treatment for domestic pension funds is incompatible with the EC Treaty, which guarantees the free provision of services and the free movement of workers and capital.¹¹ Ireland, the United Kingdom, and Denmark, have already been the subjects of proceedings initiated by the Commission for discriminatory action against foreign pension providers and their plan participants.

The Commission intends to send two reasoned opinions to Germany asking it to amend discriminatory tax legislation.¹² The first relates to a law which excludes houses outside Germany from a housing grant given to people subject to unlimited tax liability for the construction or acquisition of personal accommodation. This law discriminates against cross-border workers and restricts the free movement of persons. The second concerns a law which states that fees paid to foreign schools are not deductible from income tax, unlike fees paid to German schools, which can be deducted from the income tax base as a special expense.

As the examples above show, with the conflict between national laws and EU laws in existing member states, it is unlikely that every aspect of the tax laws in the accession countries will conform to EU treaty requirements and be “in sync” with taxation laws and practices as governed by EU rules from the date of accession. As the Commission continues to take an aggressive position vis-à-vis the elimination of discriminatory tax practices and tax obstacles to the free movement of workers and capital, more reasoned opinions, infringement proceedings, and court cases are likely to be seen, with respect to the accession countries, as well as the existing member states.

Savings Taxation
The European Council adopted the Savings Taxation Directive in June 2003.¹³ (A Directive sets out EU policy that member states are obliged to enshrine in their national laws.) The purpose of this Directive is to broaden the reach of the national tax authorities over the savings and investment income of their citizens that may be “squirreled” away in other member states but should rightfully be subject to taxation “at home” (e.g., the country of residence). It envisages the automatic exchange of information between tax authorities in respect of residents’ cross-border interest income. The “home country” tax authorities can then apply their domestic tax laws to that resident’s foreign savings income. This will be the practice for 12 of the 15 existing member states.

As part of the agreement, a carve out has been allowed for Austria, Luxembourg, and Belgium – these countries, instead, will be permitted to levy a withholding tax of 15 percent on the savings income arising in those countries of residents of other member states for the first three years; then, from January 2008, a 20 percent rate will apply, rising to 35 percent beginning January 2011. Paying agents in these countries will be withholding tax from the savings income they pay. The yields from such a tax must be shared with the concerned home country’s fisc. The execution of the Directive, however, is conditional on the application of “equivalent measures” in certain non-EU jurisdictions, like Switzerland, Monaco, the United States, Channel Islands, etc. At this writing, an agreement with Switzerland has not been achieved.¹⁴ As a result, Austria, Luxembourg, and Belgium, will hold off executing the pertinent provisions of the Savings Taxation Directive. The Directive is expected to apply in all EU member states from January 1, 2005.

The Directive will be applicable in the accession countries. Those countries will be required to adopt the Directive’s rules on tax information exchange or the withholding tax.

Special Economic Zones
The EU has taken a close look at the special economic zones (SEZs) and free trade zones (FTZs) in the accession countries, such as Poland, Slovakia, Latvia, and Hungary, that grant fiscal incentives related to corporation, payroll, and personal income taxes for businesses and their employees located in these zones. Some multinational employers with expatriate employees may be located in such zones. In most cases, these zones may see their special tax privileges modified, including phase-out and/or elimination, because they do not comply with EU rules governing state aid and distort competition in the single market. According to KPMG’s publication Image (December 2003), “The European Commission deems such ‘special economic zones’ and other tax incentives as ‘competition damaging’ and has negotiated for them to be scrapped or amended under the EU Company Tax Code of Conduct (p.3).” Some derogations have been allowed to certain zones, but in other cases, these incentive schemes are deemed incompatible with EU rules and must be scrapped, and in yet other cases, accession countries may be abolishing them under new laws.

Monitoring Progress
According to the EU’s Monitoring Report, most accession countries have made good progress towards applying the acquis on taxation (i.e., VAT, excise duties, direct taxation). And, to a large degree, they are prepared to implement administrative cooperation with respect to tax and customs matters, and for contributions to the EU budget. As of September 2003, the report noted that Estonia, Malta, and Slovenia must step up efforts in the area of direct taxation. In addition, Latvia and Lithuania are lagging in their preparations for administrative cooperation and mutual assistance.

Personal Data and Privacy

From May 1, 2004, all accession countries will be required to have structures and rules in place that protect data and data transfer according to EU rules. Accession countries are required, as part of the acquis, to adopt rules and practices consistent with the European Data Protection Directive (95/46/EC) of 24 October 1995.¹⁵

According to a recent EU report,¹⁶ for the most part, the Directive has been clearly implemented into national law, in the existing member states, and appears to have achieved its main goals: 1) the free movement of personal data and 2) at the same time balancing that with the protection of sensitive or private information. The Data Protection Directive has been important in making sure the single European market operates properly. For example, according to the Commission’s May 16, 2003 press release, (IP/03/697), before the Directive was adopted, businesses often faced difficulties transferring employee data to another member state, which is necessary if a business works all over the EU but has its central personnel administration in one member state. As another example of its effectiveness, the press release pointed out that workers who had acquired pension rights in several member states encountered difficulties when it came to the exchange of personal data needed for the actual accumulation of these rights. The aforementioned report stated, however, that there still remained some room for eliminating the differences between the respective national laws that act as a barrier to full and uniform data protection throughout the EU.

Companies (within the same group or across different groups), organizations, and governmental authorities undertake the transfer (domestic and international) of personal data. If located within the EU, they must adhere to rules set down by the EU and also by national law. Although companies may have “internal” rules for data transfer and protection, they are bound by law to meet their obligations under EU rules and national laws. A recent EuroBarometer survey¹⁷ revealed that for the relative majority of persons responsible for data protection issues (39 percent), the lack of knowledge of the data protection law best explains why certain data controllers do not fully respect this legislation.

As noted in a previous The Expatriate Administrator article¹⁸ on the subject, the EU’s data protection rules raise particular issues for employers with international assignee populations. According to the authors, of special relevance to such employers is the 8th data protection principle, which provides that: “Personal data shall not be transferred to a country or territory outside the European Economic Area (EEA) unless that country or territory ensures an adequate level of protection for the rights and freedoms of data subjects in relation to the processing of personal data.”

The Commission engages in dialogues with non-EU countries in order to ensure a high level of protection when exporting personal data to those countries. For example, in the summer of 2003, the Commission recognized that Argentinean legislation offers an adequate level of protection of personal data.¹⁹ The Commission’s green light, therefore, permits personal data to flow freely from the EU to Argentina without additional safeguards being needed to meet the requirements of the EU Data Protection Directive.

In cases involving data that is to be transferred outside the EU to a country which is not formally acknowledged by the Commission to have “adequate safeguards” for personal data (including the United States), the company should carefully consider rules and possibilities under the local data protection rules in the country from where it wishes to export the data. Alternative courses of action should be examined in consultation with a professional adviser.

For further information on data protection in the EU, see: http://europa.eu.int/comm/internal_market/privacy/index.htm

Monitoring Progress
According to the EU’s Monitoring Report, as of September 2003, Estonia, Latvia, Slovenia, and Slovakia needed to improve personal data protection.

How to Enforce the Acquis

From May 1, 2004, EU citizens (as well as public and private sector bodies and groups) who feel that they have not been accorded the rights to which they are entitled under the acquis have some options:

• They may bring their grievance before their national courts, and
• If adequate redress is not found there, if necessary, they may request that a preliminary ruling be sought from the ECJ.

However, in addition, the Commission, as it has been reviewing the status of implementation in the existing member states, will continue to play a monitoring role. Where discrepancies with EU rules are discovered and in cases where the acquis have not been properly implemented, the Commission will continue to launch infringement procedures and press member states to meet their obligations.

Conclusion

Doing business in the EU is no straightforward matter. For multinational companies operating in and across the EU, particularly as concerns the accession countries, the laws and rules have been changing at a head-spinning pace. The accession countries have had to make many adjustments and changes to accept and adopt the acquis communautaire. Multinational employers and their cross-border employees – in those areas that affect them – need to keep abreast of the changes, and beware of assuming that doing business in the accession countries will be no different than doing business in the existing members states. In theory that should be the case, but in practice, at least initially, there will be many “wrinkles” that need ironing out. Employers and employees should familiarize themselves with the changes taking place, understand how those changes will affect the way they do business, and be prepared to take advantage of the changes – and the challenges and opportunities they pose.

Footnotes:
¹ See the Treaty of Accession at: http://europa.eu.int/comm/enlargement/negotiations/treaty_of_accession_2003/index.htm.
² See the EU’s Comprehensive Monitoring Report at: http://europa.eu.int/comm/enlargement/report_2003/index.htm.
³ In addition, countries may opt for euro-zone membership, but may have to wait until all the criteria are met for euro-zone membership (as laid down in the Maastricht Treaty and revised by subsequent EU rules). See S. Shaughnessy, “The Euro Is Here: an Event Without Precedent,” The Expatriate Administrator, No. 2001-04, Winter 2001.
⁴ The free movement of workers acquis is largely comprised of EEC Regulations 68/1612/EEC, 92/2434/EEC, 70/1251/EEC, Directives 68/360/EEC, 72/194/EEC, 62/302/EEC, and Decision 93/569/EC.
⁵ G. Parker, S. Wagstyl, and J. Cienski, “U.K. to Tighten Benefit Rules to Limit EU Migration,” Financial Times, February 3, 2004, p. 4.; also see “Comment & Analysis: Migration,” Financial Times, February 9, 2004, p. 11; and “Ireland Echoes U.K.’s Limits on East Europe Workers,” International Herald Tribune online (www.iht.com), February 25, 2004.
⁶ This publication may be found at: (at http://europa.eu.int/comm/enlargement/negotiations/chapters/chap2/55260_practica_guide_including_comments.pdf .
⁷ See http://europa.eu.int/comm/enlargement/negotiations/chapters/chap2/index.htm.
⁸ 2549th Council Meeting, “Employment, Social Policy, Health and Consumer Affairs, Brussels, 1 and 2 December 2003, 15443/03 (Presse 354).
⁹ See KPMG LLP’s Flash International Executive Alert 2000-67, June 28, 2000.
¹⁰ See KPMG LLP’s Flash International Executive Alert 2004-001, January 5, 2004.
¹¹ This is a follow-up to the action undertaken by the Commission in February 2003 (see IP/03/179), in accordance with the April 2001 Communication on the elimination of tax obstacles to the cross-border provision of occupational pensions (see IP/01/575 and MEMO/01/142).
¹² From KPMG’s European Legal Watch, no. 95 Newsletter from the European Law Practice in Brussels – N°95 9 January / 22 January 2004.
¹³ Council Directive 2003/48/EC of 3 June 2003 on taxation of savings income in the form of interest payments, Official Journal, L 157 , 26/06/2003 P. 0038 – 0048.
¹⁴ Not only does Switzerland have issues with the exchange of information for civil tax purposes, it is tying an agreement on savings Directive “equivalent measures” with immigration issues relating to the Schengen agreement, as well as other “issue” dossiers to be sorted out with the EU. See, “Switzerland Rejects EU Tax Demand,” NZZ Online, February 11, 2004: http://nzz.ch/2004/02/11/english/page-synd4711480.html. Also see, “No Further Concessions for Switzerland on Savings Tax,” EurActiv.com, February 12, 2004: http://www.euractiv.com .
¹⁵ Official Journal, 23 November 1995, L281/31.
¹⁶ “Report from the Commission: First report on the implementation of the Data Protection Directive (95/46/EC),” Brussels, 15.5.2003, COM(2003) 265 final. See: http://europa.eu.int/comm/internal_market/privacy/lawreport_en.htm#actions; also see, “Protection of Workers’ Personal Data in the European Union: The Case of Surveillance and Monitoring,” Final Report, 12 October 2001; “Working Document: Transfers of Personal Data to Third Countries: Applying Article 26(2) of the EU Data Protection Directive to Binding Corporate Rules for International Data Transfers,” Adopted 3 June 2003, 11639/02/EN WP 74.
¹⁷ “Data Protection in the European Union: Executive Summary,” Flash Eurobarometer 147, Taylor Nelson SOFRES. Coordination – EOS Gallup Europe. See: http://europa.eu.int/comm/internal_market/privacy/lawreport_en.htm#actions
¹⁸ See C. Greenway and K. Fox, “Transferring Employee Data Isn't What It Used to Be: Protect Your Company and Your Employees,” The Expatriate Administrator, No. 2001-02, Summer 2001).
¹⁹ See The European Commission July 2, 2003 press release (IP/03/932) at: http://europa.eu.int/rapid/start/cgi/guesten.ksh?p_action.gettxt=gt&doc=IP/03/932|0|RAPID&lg=EN.

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