Cross-border withholding taxes: the EU approves the FASTER Directive

In June 2023, the European Commission presented a proposal relating to the FASTER system, with the aim of making withholding tax procedures in the EU more efficient and secure, both for cross-border investors and for the tax administrations of the Member States, to the benefit of the EU Capital Markets Union. Last February 28th, the EU Parliament adopted the Directive proposed by the Commission with amendments.

The Directive in question, in order to pursue the objective of simplifying the procedures for refunding excess withholding taxes in a cross-border context, aims to:

• pursue a significant reduction in the times for granting exemption or reimbursement of excess withholding tax;
• compliance by financial intermediaries with customer verification and reporting obligations with tax administrations;
• the prevention of tax abuse practices related to withholding tax.

The main tools necessary to implement the aforementioned objectives are three:

1. the release of the digital certificate of tax residence;
2. the national register of financial intermediaries;
3. accelerated procedures.

Digital certificate of residence

In order to strengthen the capacity of Member States to prevent and countera...