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REPORT (COM(2023)0324 – C90204/2023 – 2023/0187(CNS))

On the proposal for a Council directive on Faster and Safer Relief of Excess Withholding Taxes

A-9-2024-0007

Committee on Economic and Monetary Affairs · Rapporteur: Herbert Dorfmann

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Written by a language model from the full text only; every figure comes from the text. The paragraph links open the paragraph a statement rests on — check the text itself before relying on it.

Parliament's amended version of the proposed Council directive on Faster and Safer Relief of Excess Withholding Taxes sets common rules for withholding tax relief procedures on cross-border investments, including digital tax residence certificates, registration of financial intermediaries, and relief at source or quick refund procedures. It raises the threshold for reduced due diligence and reporting to EUR 1500, extends deadlines for eTRC issuance and refund processing, and strengthens monitoring and evaluation, including by ESMA and EBA.

Committee position. The Committee on Economic and Monetary Affairs proposes to approve the Commission proposal as amended, with changes to deadlines, thresholds, and monitoring.

Key points

  1. Approves the Commission proposal as amended, calling on the Commission to alter its proposal accordingly.
  2. Requires Member States to issue eTRCs within three working days, extendable by up to five more, and to include the double tax treaty in the certificate.
  3. Sets the reporting deadline for certified financial intermediaries at 20 calendar days after the record date, with a 15-day extension for pending settlements.
  4. Raises the threshold for reduced due diligence and reporting from EUR 1000 to EUR 1500.
  5. Requires Member States to inform each other about registration rejections and removals, specifying grounds, and to update national registers.
  6. Mandates that certified financial intermediaries verify risks of residence and citizenship by investment schemes identified by the OECD.
  7. Allows Member States to reject refund requests if verification or tax audit is initiated, and to apply interest on late refunds unless there are reasonable doubts.
  8. Requires ESMA and EBA to monitor cum-cum and cum-ex risks, and Member States to cooperate with EPPO and other bodies to detect illegal schemes.
  9. Directs the Commission to evaluate the Directive every five years, with a first report by December 2031, covering simplification for retail investors, service fees, and further anti-abuse measures.
  10. Restricts data subject rights only when necessary and limits data retention to five years.

Who is affected

  • Financial intermediaries, including credit institutions, investment firms, and central securities depositories, must register and comply with reporting and due diligence obligations.
  • Retail investors benefit from a higher threshold for reduced verification and from simplified procedures to be examined in future evaluations.
  • Member States' tax authorities must issue eTRCs faster and process refunds within 25 days, with interest on late payments.

Figures and deadlines

  • EUR 55 billion estimated cost of cum-ex and cum-cum schemes between 2001 and 2012 in 11 Member States.
  • EUR 141 billion estimated cost to 10 governments, including some Member States.
  • EUR 1500 threshold for reduced due diligence and reporting.
  • Three working days to issue eTRC, extendable by five more.
  • 20 calendar days after record date for reporting, with 15-day extension for pending settlements.
  • 25 calendar days for processing refund requests.
  • Six years for keeping documentation and deleting personal data.
  • Five years for data retention and evaluation cycle.

Legal basis: Article 115 of the Treaty on the Functioning of the European Union