Withholding tax: EU Council agrees new rules

On May 14th 2024 the Council of the European Union (“Council”) reached an agreement (general approach) on safer and faster procedures to obtain double taxation relief, which will help boost cross-border investment and help fight tax abuse. The so-called FASTER initiative (“Faster”) aims to make withholding tax procedures in the EU safer and more efficient for cross-border investors, national tax authorities and financial intermediaries, such as banks or investment platforms. The Council reached a general approach on a draft of a directive on faster and safer relief of excess withholding taxes (“Directive”) based on the following points: ensuring fair taxation in the internal market and the good functioning of the Capital Markets Union are among the key political priorities for the European Union (“EU”). In this context, removing obstacles to cross-border investment, while combating tax fraud and abuse is critical. Such obstacles exist, for example, in cases where inefficient and disproportionately burdensome procedures exist to relieve excess taxes withheld at source on dividend or interest income paid on shares or bonds traded publicly to non-resident investors; in order to stre...