On Tuesday 7 November, Herbert Dorfmann MEP (EPP, Italian) presented his draft report on the new ‘withholding tax’ procedure for cross-border financial income to the European Parliament’s Committee on Economic and Monetary Affairs (ECON) (see EUROPE 13270/24). His colleagues supported his proposal to strengthen the text.
Presented in June by the European Commission (see EUROPE 13204/18), this text nicknamed ‘FASTER’ should make these rules more effective and more secure for investors, financial intermediaries such as banks and the tax authorities of the Member States.
“70% of small investors in Europe waive the refund and accept the double taxation of gains; they don’t understand why they have to pay tax in two different countries”, stressed Mr Dorfmann.
“The Council of the EU is not very enthusiastic, because the Member States are satisfied when taxpayers pay the tax and do not ask for the refund that would be due to them,” he deplored.
The rapporteur felt that the Commission's proposal was “a good start”, but that it was “not very ambitious”. He therefore hopes that the European Parliament’s position will go further, while remaining realistic.
He felt that the definition of the beneficial owner, which he felt had been “deliberately avoided”, was a key issue in the debate.
Mr Dorfmann also felt that tax administrations should have the necessary instruments and tools, a view supported by Niels Fuglsang (S&D, Danish). The rapporteur would like the text to require greater clarity in the registration of financial intermediaries, particularly for intermediaries from third countries, who should be on a European register.
Mr Fuglsang endorsed many of the amendments to the draft report, including the examination of the possibility of streamlining default procedures at source in all Member States. It also approved the core elements of the main proposal, such as the common digital tax resident certificate, reporting for financial intermediaries and the relief and rapid refund systems.
Martin Hlaváček (Renew Europe, Czech) also supported the text. He stressed the importance of putting in place more effective refund procedures and providing Member States with the tools they need to effectively combat tax fraud and abuse.
MEPs must submit their proposed amendments by Wednesday 15 November, with a view to examining them on Monday 4 December. The final proposal will be put to the ECON vote at the end of January.
Read the draft report: https://aeur.eu/f/919 (Original version in French by Anne Damiani)