On Tuesday 23 January, the members of the European Parliament’s Committee on Economic and Monetary Affairs (ECON) adopted their opinion on the new directive on Faster and Safer Relief of Excess Withholding Taxes (FASTER) (see EUROPE 13288/18), with 39 votes in favour, one against and one abstention.
The aim of this directive is to make these rules more effective and more secure for investors, financial intermediaries such as banks and Member States’ tax authorities.
In their position, MEPs proposed a number of changes to the digital tax residence certificate (eTRC). They give Member States additional time to issue the eTRC and to inform the applicant of the certificate in the event of verification of a taxpayer’s tax residence.
They add that Member States must take appropriate measures to require an individual or entity deemed to be resident for tax purposes in their jurisdiction to inform the tax authorities issuing the eTRC of any change that may affect the validity or content of the eTRC.
With regard to deletion from the national register, MEPs suggest that a Member State which deletes a certified financial intermediary from its national register should without undue delay inform all other Member States which maintain a national register, stating the reasons for the deletion. They add that Member States must update their national registers to reflect the status of financial intermediaries who no longer hold certification.
With regard to the duty of due diligence concerning the eligibility of the registered owner, MEPs want Member States to take the necessary measures to ensure that certified financial intermediaries applying for a rebate verify the risks linked to residence and citizenship by investment systems that present a potentially high risk. They want to prevent the misuse by registered owners of an eTRC issued by Member States or third countries that offer such systems.
MEPs also want to strengthen controls and the exchange of information. They suggest that the European Securities and Markets Authority (ESMA) and the European Banking Authority (EBA) regularly monitor the risk of ‘cum-cum’ and ‘cum-ex’ optimisation practices in the EU. They also propose that Member States establish coordinated cooperation and mutual assistance between national competent authorities, tax authorities and other law enforcement bodies, such as the European Public Prosecutor’s Office (EPPO), in order to detect and prosecute illegal withholding tax recovery schemes.
Finally, MEPs expect the European Commission, in its assessment of the operation of this directive after transposition, to examine many more criteria than initially envisaged. They also drafted a revision clause in connection with this assessment.
As far as the EU Council is concerned, the Belgian Presidency is committed to making progress on this issue (see EUROPE 13319/17).
Read the compromise amendments: https://aeur.eu/f/aj5 (Original version in French by Anne Damiani)