European Commission simplifying withholding tax procedures

The European Commission has proposed new rules to make withholding tax procedures in the EU more efficient and secure for investors, financial intermediaries, and tax administrations.

A common EU digital tax residence certificate is being proposed to make withholding tax relief procedures faster and more efficient. Member States currently rely on paper-based procedures.

For example, investors with a diversified portfolio in the EU will need only one digital tax residence certificate to reclaim several refunds during the same calendar year, the Commission stated.

Next, the Commission is proposing to complement the existing standard refund procedure with a two fast-track procedures.

“A “relief at source” procedure and a “quick refund” system will make the relief process faster and more harmonized across the EU. Member States will be able to choose which one to use – including a combination of both,” the Commission said.

Finally, a standardized reporting obligation is being proposed to provide national tax administrations with the necessary tools to check eligibility for the reduced rate and to detect potential abuse.

The proposal would come into force on January 1, 2027, if adopted by the Member States.