Tax & Legal 13 March, 2024

FASTER directive approved by European Parliament 

Crowe Peak/ Knowledge Hub/ Tax & Legal/

FASTER directive approved by European Parliament 

EU initiative for withholding tax procedures to promote cross-border investments and prevent tax abuse

 The European Parliament recently approved an amended proposal by the European Commission aimed at enhancing the efficiency and security of withholding tax procedures within the EU for investors, financial intermediaries, and tax administrations of EU Member States. Known as the FASTER initiative, this proposal seeks to promote cross-border investment and combat tax abuse. When FASTER is implemented throughout the EU, it is expected to support European businesses in enhancing their competitive position, stimulating investments, and reducing administrative burdens in the field of taxation. In that context, our tax professionals are diligently monitoring the developments surrounding FASTER. Want to learn more about the impact of FASTER on your organization or portfolio? Keep reading or contact a specialist directly. 

Removing barriers to cross border investment and addressing tax abuse 

Foreign investors often encounter withholding taxes on dividends or interest income received from EU Member States. While relief for such taxes may be available under applicable double tax treaties, the procedures for obtaining relief are typically lengthy and costly. These procedures are also susceptible to abuse, as evidenced by recent tax scandals. 

In an effort to remove barriers to cross-border investments and address tax abuse, the FASTER initiative will expedite withholding tax relief procedures by: 

  • Introducing a standardized EU digital tax residence certificate, to be issued upon request within one working day. This certificate will enable investors to reclaim multiple refunds on a diversified EU portfolio. 
  • Implementing fast-track procedures alongside the existing standard refund procedure, which includes relief at source and a quick refund system. These measures will streamline and harmonize the relief process across the EU. 
  • Establishing a standardized reporting obligation to allow tax administrations to verify eligibility for relief and identify potential abuse. 

FASTER and your (international) business 

Once adopted by the EU Member States, the FASTER initiative should come into force on 1 January 2027. For more information on the impact of the FASTER initiative for your company, please contact a Crowe Peak tax specialist here.  

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