European Commission attempts to harmonise WHT procedures
30/06/23
On 19 June 2023, the European Commission published the draft Faster and Safer Relief of Excess Withholding Taxes (FASTER) Directive to encourage investment in the Single Market by making withholding tax procedures in the European Union more efficient and secure for investors, financial intermediaries and Member States tax administrations. FASTER is a key element of the Communication on Business Taxation for the 21st Century, and the Commission's Action Plan on the Capital Markets Union 2020. The Capital Markets Union (CMU) is a plan to create a single market for capital, allowing investors to benefit regardless of where they are located.
FASTER responds to calls for standardised withholding tax procedures and is estimated to save investors around 5.17 billion Euro per year. The proposal includes anti-avoidance provisions, as well as new obligations for both financial institutions and tax administrations. The key features of the proposal are (i) a common EU electronic tax residence certificate, (ii) a standardised 'Relief at source' procedure and a 'Quick Refund' system and (iii) a common reporting standard. Once adopted by all EU Member States, the proposal is expected to come into force on 1 January 2027.
For more information, we refer you to PwC Tax Policy Alert which is available here.
