- On 14 May 2024, the Economic and Financial Affairs Council (ECOFIN) of the EU agreed on the EU's Faster and Safer Tax Excess Refund (FASTER) Directive, setting out new rules for a common EU-wide system for the relief or refund of WHT on cross-border dividends or interest on publicly traded shares or bonds, paid to non-resident investors.
- The aim is to foster cross-border investment, tackle tax fraud and simplify taxation, and for tax authorities to share information and cooperate. This may be relevant for UK investors receiving EU-source passive income.
- Member states will be able to choose between one of the two fast-track procedures complementing the existing standard refund procedure (this is mandatory for dividends on publicly traded shares, optional for interest on publicly traded bonds):
- a fully-fledged common EU relief at source system (with the WHT treaty rate applied at the time of the dividend/interest payment, avoiding double taxation), or
- full payment of WHT at source but with a faster WHT refund process (within 60 calendar days).
- A common EU digital tax residence certificate is intended to make WHT relief faster and more efficient.
- Large EU financial intermediaries will be required to join a national register of certified financial intermediaries and report the payment of dividends or interest to the relevant tax authority, to allow the latter to check eligibility for the reduced rate and detect abuse. The register will also be open to non-EU and smaller EU financial intermediaries on a voluntary basis. Taxpayers investing in the EU through certified financial intermediaries will benefit from fast-track WHT procedures.
- Member states may qualify for an exemption from adopting the directive, if certain conditions, including low market capitalisation, are met.
- Timing: the Council of the EU formally adopted FASTER at the ECOFIN meeting on 10 December 2024. Member states have to transpose the directive into national legislation by 31 December 2028, and with the rules to come into force on 1 January 2030.
Resources (click to open)
- EU formally adopts "FASTER" directive on withholding tax procedures (Deloitte tax@hand, December 2024)
- Taxation: Council agrees on new rules for withholding tax procedures (FASTER) (Council of the EU press-release, May 2024)
- EU Commission proposes new FASTER directive to simplify WHT procedures (Deloitte tax@hand, June 2023)
- New rules on withholding tax procedures in the EU (EC press release, June 2023)
- Withholding taxes – new EU system to avoid double taxation (EU consultation, April 2022 until 24 June 2022 and consultation outcome)
