Brussels, 19/10/2009 (Agence Europe) - On Monday 19 October 2009, the European Commission adopted a recommendation that outlines how EU Member States could make it easier for investors resident in EU Member States to claim withholding tax relief on dividends, interest and other securities income received from other Member States. Designed to make it easier for people to invest in other countries without hurting national tax receipts, the recommendation would increase EU GDP by €3.4 bn if it were to be applied across the EU, compared with the current situation where the process of claiming withholding tax relief is lengthy and cumbersome.
The recommendation encourages Member States to apply at source rather than by refund any withholding tax relief applicable to securities income under double taxation treaties or domestic law; encourages Member States to apply quick and standardised refund procedures where they cannot provide relief at source, for example because the investor has not provided all necessary information, and lists possible elements of such refund procedures; encourages Member States to accept alternative proofs of investors' entitlement to tax relief besides certificates of residence ; suggests how Member States can involve financial intermediaries in making claims on behalf of investors and, in particular, how the procedures could operate where there is a chain of financial intermediaries, in different Member States, between the issuer of the securities and a beneficiary; encourages greater acceptance by Member States of electronic rather than paper information; and suggests how Member States could set up single or joint audits or even external audits to investigate the compliance of financial intermediaries with obligations created in line with the recommendation.
The Commission's approach is based on the (2006-2007) reports of the EU Clearing and Settlement Fiscal Compliance Experts' Group (FISCO) and on existing procedures in several countries (Germany, Finland, Ireland, France, the Netherlands, the Czech Republic, Slovakia and Sweden). The Commission does not rule out further moves in the future to set up information channels between the Member States in this connection. (M.B. trans fl)