European experts endorsed the ‘FASTER’ initiative on withholding tax procedures in the EU, adopted by the Ecofin Council in December (see EUROPE 13542/3), on Wednesday 22 January at a conference organised by the think-tank Centre for European Policy Studies (CEPS). However, they expressed some concerns about its implementation.
Maximilian Todtenhaupt, Professor of Public Finance at the Leibniz University of Hanover and the Norwegian School of Economics, has demonstrated through his research that current tax compliance costs are hampering the capital market, particularly non-direct investment abroad.
Hannah Nusser, a partner at financial audit and advisory firm EY Tax, said that the new common digital tax residence certificate (eTRC) is “a big step forward” and that the rebate itself looks “very promising”.
Katja Pussila, risk manager at the Finnish tax authorities, said that ‘FASTER’ will improve tax transparency and “restore a little confidence in relation to fraud such as ‘CumEx’ and ‘CumCum’”. The European initiative is in fact based on the OECD's ‘TRACE’ (Treaty Relief And Compliance Enhancement) initiative, which has already been applied in her own country. Nevertheless, she called for patience: “The first year will be a practice year, and it will take a few years for everyone to feel comfortable”.
She also considered that liability was an important issue, requiring guidance from the European Commission. For her part, Ms Nusser expressed concern about the wide margin for manoeuvre provided in the directive regarding implementation, with both mandatory and optional sections. “There are a lot of exceptions, and we are afraid that ‘FASTER’ will not be applied uniformly [...], which might not produce the desired effects”, she warned.
“We need to agree on a number of technical implementation issues and technical specifications covering a whole range of aspects, including the design of this certificate and the European portal”, confirmed Gerassimos Thomas, Director General of the Commission’s Taxation DG (TAXUD). “All these technical issues will be developed in seven acts, which we will submit to the Member States and industry for consultation”, he added. (Original version in French by Anne Damiani)