FASTER Initiative

This will make withholding tax relief procedures faster and more efficient. For example, investors with a diversified portfolio in the EU will need only one digital tax residence certificate to reclaim several refunds during the same calendar year. 
 
The digital tax residence certificate should be issued within one working day after the submission of a request. At present, most Member States still rely on paper-based procedures.

The ‘relief at source’ and ‘quick refund’ procedures will make the relief process faster and more harmonised across the EU. EU countries will be able to choose which one to use – including a combination of both. 
 

• Under the ‘relief at source’ procedure, the tax rate applied at the time of payment of dividends or interest is directly based on the applicable rules of the double taxation treaty provisions. 
• Under the ‘quick refund’ procedure, an initial payment is made taking into account the withholding tax rate of the Member State where the dividends or interest is paid. Refunds of any overpaid taxes are granted within 50 days from the date of payment. 

This will allow national tax administrations to check eligibility for the reduced rate and detect potential abuse. Certified financial intermediaries will have to report the payment of dividends or interest to relevant tax administrations so that the latter can trace the transaction. 
 
In particular, large EU financial intermediaries will be required to join a national register of certified financial intermediaries. This register will also be open to non-EU and smaller EU financial intermediaries on a voluntary basis. 
 
Taxpayers investing in the EU through certified financial intermediaries will benefit from fast-track withholding tax procedures and avoid double taxation on dividend payments. The more financial intermediaries register, the easier it will be for tax authorities to process refund requests, regardless of the procedure used.

The new tax residence certificate will allow investors to submit their withholding tax refund request digitally, making the reclaim process faster and smoother. Only one tax residence certificate will be needed to reclaim several refunds during a calendar year, thus avoiding the issuance of multiple certificates of residence for investors with diversified portfolios. 
 
Overall, the new withholding tax framework will grant investors access to fast-track procedures, ensuring the tax rights they are entitled to and avoiding double taxation.

European tax authorities lose significant amounts of money every year because of withholding tax abuse. 
 
The new reporting obligations will mean that tax authorities have full visibility of the financial chain to check whether investors are eligible for reduced rates and to ensure that a withholding tax refund is correctly granted, thereby fighting tax abuse.

The digitalisation of the tax residence certificate and the standardisation of reporting obligations and refund requests would allow financial intermediaries to automate their processes, saving time and money. This would speed up the refund process as well as make withholding tax procedures more secure.

According to the proposal, EU countries will require Certified Financial Intermediaries to have adequate procedures in place to ensure taxpayers are eligible for refunds. 
 
Certified Financial Intermediaries will collect the electronic tax residency certificate of the taxpayer or the appropriate proof of residence in a non-EU country and verify this information against their own records. They will also need to collect a statement indicating that the taxpayer is the beneficial owner of the security and that they have not engaged in any financial arrangement that is linked to dividend or interest payment on the underlying securities.