The Council of the EU has reached an agreement (general approach) on safer and faster procedures to obtain double taxation relief, which will help boost cross-border investment and help fight tax abuse.
The so-called FASTER initiative aims to make withholding tax procedures in the EU safer and more efficient for cross-border investors, national tax authorities and financial intermediaries, such as banks or investment platforms.
The FASTER directive will introduce:
A common tax residence certificate that tax-paying investors would be able to use in order to benefit from the fast-track procedures to obtain relief from withholding taxes. Member States will provide an automated process to issue digital tax residence certificates (eTRC) to a natural person or entity deemed resident in their jurisdiction for tax purposes. Certificates are to be issued within 14 calendar days after a request is submitted (instead of 1 working day as initially proposed).
Two fast-track procedures (a “relief-at-source” procedure and a “quick refund” system) complementing the existing standard refund procedure for withholding taxes: (i) a “relief-at-source” procedure where the relevant tax rate is applied at the time of payment of dividends or interest; and (ii) a “quick refund” system where the reimbursement of overpaid withholding tax is granted within a set deadline.
Standardised reporting for financial intermediaries, which will make it easier for national tax authorities to detect potential tax fraud or abuse.
Due to the changes the Council made in the Directive during the negotiations, the European Parliament will be consulted again on the agreed text.
The directive will then need to be formally adopted by the Council before being published in the EU’s Official Journal and entered into force. Member states will then have to transpose the directive into national legislation by 31 December 2028, and the national rules will have to become applicable from 1 January 2030.
The Council of the EU has reached an agreement (general approach) on safer and faster procedures to obtain double taxation relief, which will help boost cross-border investment and help fight tax abuse.
The so-called FASTER initiative aims to make withholding tax procedures in the EU safer and more efficient for cross-border investors, national tax authorities and financial intermediaries, such as banks or investment platforms.
The FASTER directive will introduce:
A common tax residence certificate that tax-paying investors would be able to use in order to benefit from the fast-track procedures to obtain relief from withholding taxes. Member States will provide an automated process to issue digital tax residence certificates (eTRC) to a natural person or entity deemed resident in their jurisdiction for tax purposes. Certificates are to be issued within 14 calendar days after a request is submitted (instead of 1 working day as initially proposed).
Two fast-track procedures (a “relief-at-source” procedure and a “quick refund” system) complementing the existing standard refund procedure for withholding taxes: (i) a “relief-at-source” procedure where the relevant tax rate is applied at the time of payment of dividends or interest; and (ii) a “quick refund” system where the reimbursement of overpaid withholding tax is granted within a set deadline.
Standardised reporting for financial intermediaries, which will make it easier for national tax authorities to detect potential tax fraud or abuse.
Due to the changes the Council made in the Directive during the negotiations, the European Parliament will be consulted again on the agreed text.
The directive will then need to be formally adopted by the Council before being published in the EU’s Official Journal and entered into force. Member states will then have to transpose the directive into national legislation by 31 December 2028, and the national rules will have to become applicable from 1 January 2030.
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