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Action 10 - Alleviating the tax associated burden in cross-border investment

Progress so far on action 10 of the capital markets union 2020 action plan.

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Part of objective 3 of the capital markets union (CMU) action plan, action 10 aims to alleviate the tax associated burden in cross-border investment.

Withholding tax (WHT)

In order to lower tax-related costs for cross-border investors and prevent tax fraud, the Commission adopted on 19 June 2023 a proposal for a Directive on Faster and Safer Relief of Excess Withholding Taxes. This proposed directive aims to make it easier and faster for investors to claim back excess withholding tax that they have been subject to and it also aims to combat complex tax abuse schemes by improving reporting standards and the processes around withholding tax refunds.

The key actions proposed that aim to make life easier for investors, financial intermediaries and national tax authorities include:

  • a common EU digital tax residence certificate to make withholding tax relief procedures faster and more efficient. Investors will need only one digital tax residence certificate which will be usable across the EU
     
  • two fast-track procedures complementing the existing standard refund procedure: a “relief at source” procedure and a “quick refund” system, which will make the relief process faster and more harmonised across the EU. Member States will be able to choose which one to use – including a combination of both
     
  • a standardised reporting obligation that will provide national tax administrations with the necessary tools to check eligibility for the reduced rate and to detect potential abuse. Certified financial intermediaries will have to report the payment of dividends or interest to the relevant tax administration so that the latter can trace the transaction.

Overall, these standardised procedures are estimated to save investors around €5.17 billion per year and make it easer and more attractive to invest across borders within the EU and to invest into the EU from a third country.

A public consultation was launched on 1 April 2022 and was running until 26 June 2022.

An inception impact assessment was published on 28 September 2021.

 

Back to the list of actions under the 2020 CMU action plan