European Finance Ministers reached an agreement (general approach) on the ‘FASTER’ initiative on withholding tax procedures in the EU (see EUROPE 13408/4) at the ‘Economic and Financial Affairs’ Council on Tuesday 14 May. This directive aims to make these procedures safer and faster in order to obtain exemption from double taxation.
It will also harmonise the procedures for applying reduced rates, which currently depend on bilateral agreements, and will help to stimulate cross-border investment and combat tax abuse.
“Work on this directive was [...] technically very complex and complicated, especially due to the specificities of the national tax systems and the national capital markets, but I am very glad that we have successfully resolved all the open issues”, stressed Vincent Van Peteghem, Belgium’s Finance Minister, at the press conference.
During the public debate, he detailed the latest proposal from the Presidency of the Council of the EU, in particular with regard to the two issues still to be resolved.
On the one hand, Belgium has proposed that the market capitalisation ratio be set at 1.50% instead of 1% as previously proposed. It also proposed that Chapter III, devoted to the rebate procedure, should only become mandatory if this threshold is exceeded for four consecutive years. In addition, for the Member States concerned, transposition would be extended from three to five years.
On the other hand, the Presidency wanted to retain the €100,000 threshold for growth dividends, which allows specific cases to be excluded from accelerated procedures.
Joaquim Miranda Sarmento, the Portuguese minister, indicated his support for this proposal, in particular “the flexibility and the possibility of partial or at least feasible implementation”. Zbyněk Stanjura, his Czech counterpart, explained that his country was “sceptical about this file from the very beginning, because nothing is faster and more efficient than the relief source system we are currently applying in my country”. In a spirit of compromise, he nevertheless accepted the Presidency’s latest proposal. “For the future, more soft law instruments instead of legislative acts would be preferable”, he added. “Unnecessary blanket harmonisation can burden tax administration and taxpayers”, he concluded.
However, Marnix Van Rij, the Dutch minister, and Bertrand Dumont, the Director General of the French Treasury, would have liked the text to go further. “We would have preferred that all Member States would apply a faster withholding procedure, as we strive for certainty for investors, regardless of which Member State they invest in”, lamented Mr Van Rij. “We will no doubt have to go further in the future in terms of harmonisation and integration ”, added Mr Dumont.
This text will be submitted to ministers for adoption, but will also require a further consultation of the European Parliament, given the substantial changes made to the initial proposal.
Read the general approach: https://aeur.eu/f/c7b (Original version in French by Anne Damiani)