On 19 June 2023, the European Commission published the Proposal for a Council Directive on Faster and Safer Relief of Excess Withholding Taxes. With this new initiative, the Commission aims to tackle the current particularly burdensome withholding tax refund procedures for cross-border investors in the EU and, at the same time, the risks of tax abuse related to refund procedures revealed notably by the Cum/Ex and Cum/Cum scandals.
This Proposal aims at creating:
- Common EU digital tax residence certificates;
- Standardised reporting obligations for financial intermediaries to provide national tax administrations with the necessary tools to check eligibility for the reduced rate and to detect potential abuse; and
- Two fast-track procedures, assorted with new due diligence obligations, complementing the existing standard refund procedure to relieve any excess WHT that can be withheld by a Member State on dividend or interest income paid on shares or bonds traded publicly to non-resident investors.
Hereafter, we briefly describe the implications of the Proposal.