International Taxation

Luxembourg: Streamlined EU-Wide Withholding Tax Procedures

An analysis by ATOZ Tax Advisers, Taxand Luxembourg:

The European and Financial Affairs Council (ECOFIN) has recently agreed on a new directive, FASTER, aimed at streamlining withholding tax procedures within the EU. The directive aims to simplify the currently burdensome withholding tax refund processes for cross-border investors and reduce the risks of tax abuse.

Key aspects of FASTER include:

  • EU Digital Tax Residence Certificate (eTRC): A digital certificate to be issued within one working day, replacing paper-based procedures and used to claim withholding tax refunds.
  • Standardised Withholding Tax Relief Procedure: Standard reporting obligations for financial intermediaries and two fast-track procedures to expedite withholding tax relief.
  • National Registers: Establishment of registers for certified financial intermediaries (CFIs) to manage payments and report investor information.
  • Obligations of CFIs: Due diligence and reporting requirements to verify investor eligibility for reduced withholding tax rates and trace payment flows.

The European Parliament will be consulted on the revised text before formal adoption, which is expected by early 2025, with implementation by 2030. Antoine Dupuis and Marie Bentley from ATOZ Tax Advisers, Taxand Luxembourg analyse the FASTER directive and its implications in further detail here.

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