The EU Commission today published the proposed Directive 𝘊𝘖𝘔(2023) 324 𝘧𝘪𝘯𝘢𝘭 on the implementation of a system to make it faster and more secure to handle requests for direct application of conventional withholding taxes or refund of higher withholding taxes applied to payments of dividends from shares traded on regulated markets and interest accrued on bonds admitted to trading on regulated markets.
The planned withholding administration and management system rests on the following principles:
- Development of an automated process of issuing – within a single day – the single digital tax residence certificate for all EU states;
- two new and different procedures-which member states will be able to adopt either alternatively or cumulatively-for the direct application of conventional withholding taxes or for the “prompt refund” of overcharged taxes. This second option will allow for a refund of any higher taxes levied in excess of those provided for in the applicable double tax treaty within 50 days from the date of payment;
- the management of both procedures by the identified certified financial intermediaries, on whom certain obligations will fall, including: communicating to the tax authorities certain information regarding payments, verifying – within the prescribed limits – the entitlement of the conventional treatment in the hands of the recipients of payments, and managing requests for direct application/reimbursement of withholding taxes in the place and interest of the recipients of payments.
The draft calls for the enacted directive to be transposed by member states by Dec. 31, 2026, and for the measures to come into force on Jan. 1, 2027.
For more information: https://ec.europa.eu/transparency/documents-register/detail?ref=COM(2023)324&lang=en