More
    - Advertisement -
    HomeNewsEU Proposes FASTER Initiative to Accelerate Tax Relief Procedures for Investors

    EU Proposes FASTER Initiative to Accelerate Tax Relief Procedures for Investors

    In a move to streamline and expedite tax relief procedures for investors in the European Union, the European Commission has put forth the FASTER proposal. The initiative aims to address the cumbersome and unharmonized processes currently in place, which often deter cross-border investments and leave room for fraudulent activities.

    Currently, when an EU resident invests in securities in another Member State, they are subject to withholding tax in the source country. To avoid double taxation, investors must apply for a refund of the excess tax withheld. However, the existing relief procedures are complex, paper-based, and vary across Member States, discouraging investors and creating opportunities for fraudsters to exploit the system.

    Under the FASTER proposal, Member States can choose between implementing a ‘relief at source’ system or a ‘quick refund’ system. These options aim to accelerate and simplify withholding tax relief for investors, promoting cross-border investment within the EU. Additionally, the proposal introduces safeguards to prevent tax abuse, particularly in cases like cum-ex fraud.

    Key Components of the Proposal

    1. Digital Residency Certificate (eTRC): The proposal introduces a harmonized digital residency certificate to streamline the process of verifying residency for tax purposes. This digital certificate will replace the current paper-based system, reducing administrative burdens and enhancing efficiency.
    2. Reporting Obligations for Financial Intermediaries: Financial intermediaries will be required to register in a national financial intermediaries register and report relevant information on dividend and interest payments. This measure aims to enhance transparency and prevent tax abuse.
    3. Relief at Source and Quick Refund Procedures: Member States can choose to implement either a relief at source system or a quick refund system to expedite the process of withholding tax relief for investors. These procedures aim to reduce delays and administrative burdens for investors.

    Expected Impact and Next Steps

    The Commission estimates that the FASTER initiative could result in cost savings of around €5.2 billion per year for EU and non-EU investors. The proposal is currently under review by the European Parliament and the Council, with Member States expected to transpose the new rules into national legislation by 2027.

    The FASTER initiative represents a significant step towards harmonizing and simplifying withholding tax relief procedures in the EU. By promoting cross-border investment and enhancing transparency, the proposal aims to create a more conducive environment for investors while combatting tax abuse and fraud in the financial sector.

    We acknowledge The European Times for the information.

    Author

    LEAVE A REPLY

    Please enter your comment!
    Please enter your name here

    spot_img

    Must Read

    spot_img