As announced in its action plan on the Capital Market Union (see EUROPE 11400), the European Commission on Monday 11 December presented a code of conduct on withholding tax, to help the member states to reduce costs and simplify procedures for cross-border investors in the EU.
“Today's code of conduct should help investors to avoid long delays and high costs when claiming withholding tax refunds”, and the European Commissioner Financial Services, Valdis Dombrovskis, in a press release.
The aim of making it easier to reimburse investors in the event of dual taxation was central to this Commission initiative. If withholding tax is applied in the EU country of origin of the investment income, there are certain cases in which it will be taxed again in the member state in which the investor resides. The Commission puts the annual costs of compliance and the rebates that investors miss out on due to overly complex and expensive reimbursement procedures at €8.4 billion a year.
On the basis of best practice identified in nine-member states (the Netherlands, Slovenia, Sweden, the United Kingdom, Cyprus, Portugal, Finland, Estonia and Lithuania), the code of conduct - which will be voluntary - offers the member states a range of specific measures to get around these problems and put more effective fiscal procedures in place.
Amongst other things, it recommends: - measures to help smaller investors for whom the rules on the refund of withholding tax are overly complex; - the creation of user-friendly digital forms to apply for withholding tax relief in the event of overpayment; - a reliable and effective timeframe for tax authorities to grant withholding tax relief; - a single point of contact in member states' tax administrations to deal with questions from investors on withholding tax.
The code of conduct is available at: http://bit.ly/2kpv1NU. (Original version in French by Marion Fontana)