We appreciate the Commission’s efforts to explore possible solutions to the withholding tax relief procedures for cross-border investors, which are currently burdensome and costly, entail double taxation and hamper cross-border investments in the EU.
Of the alternatives mentioned, the EACB Members support the establishment of a standardized EU-wide system for withholding tax relief at source, which is Option 2 of the current EU initiative. Due to the Common Reporting Standard for the Automatic Exchange of Information in tax matters, financial institutions need to know anyway whether a customer can claim at-source relief from withholding tax. Furthermore, in addition to the issuers of the security, those obliged to deduct taxes should also be added.
If this option fails to be implemented, EACB would then support improving withholding tax refund procedures to make them more efficient, as stated under Option 1. We believe that faster, more efficient and more transparent procedures can also provide relief. In this respect, withholding tax refund procedures should use standardized forms and should be based on the common definitions and processes throughout the EU.
Incidentally, in its deliberations, the EU should make sure to take into account the experience gained at the OECD level in the Tax Relief and Compliance Enhancement (TRACE) project in order to achieve international compatibility.