The European Commission has published a new draft directive (FASTER) in the field of international tax law. This time it will concern the withholding tax system. The main aim is to improve the efficiency of procedures that are applied in relation to withholding taxes and to prevent abuse of the system.
Which parts will be affected by the new rules?
The draft Directive modifies the process of the payment of dividends from the holding of publicly traded shares or interest accruing from the issuance of bonds.
What changes are planned?
One of the primary changes will be the introduction of a digital certificate on tax residency (eCTR) or a national register of financial intermediaries who stand between the issuer of securities and the investor. The Directive also plans to complete the existing processes for returning withheld taxes by a new system of “fast refunds” and a system of tax exemption at the source.
The new rules are expected to become effective from 1. 1. 2027, if the Directive is adopted.