Changes from plenary report to plenary report

RemovedRecital 8: (8) In order to render the Capital Markets Union more effective and competitive, procedures for relief of excess withholding taxes on securities’ income should be facilitated and accelerated, where adequate information has been provided by relevant certified financial intermediaries, including on the identity of the investor. The relevant certified financial intermediaries consist of all the certified financial intermediaries in the payment chain between the investor and the issuer of the securities, which might be required to also provide information on payments effected by non-certified financial intermediaries in the chain, as per the policy choice of each Member State. Taking into account the different approaches in Member States, two types of procedures are envisaged: (i) relief at source by direct application of the appropriate tax rate at the time of withholding and (ii) quick refund within a maximum of 50 days of the date of payment of the dividend or, as the case may be, of the date when the bond issuer must pay interest to the bond holder (coupon date). Member States should be free to introduce any of the two or a combination of both procedures, as they deem appropriate while ensuring that at least one is available for all investors, where the requirements of this Directive have been met. To ensure the proper and timely implementation of these procedures by the Member States concerned, it is appropriate to apply interest on late refunds of excess withholding taxes t…

RemovedRecital 9: (9) In order to safeguard the systems for relief of excess withholding taxes, Member States maintaining a national register should also require certified financial intermediaries to verify the eligibility of investors that wish to claim a relief. In particular, certified financial intermediaries should collect the tax residence certificate of the relevant investor, and a declaration that such investor is the beneficial owner of the payment according to the legislation of the source Member State. They should also verify the applicable withholding tax rate based on the investor’s specific circumstances and indicate if they are aware of any financial arrangement involving the underlying securities that has not been settled, expired or otherwise terminated at the ex-dividend date. The due diligence requirements could be applied on an annual basis. Certified financial intermediaries should be held liable for tax revenue losses that have been incurred due to the inadequate fulfilment of these obligations, to the extent that national law of the Member State where the loss incurred so provides. In order to ensure proportionality of the burden and liability imposed on certified financial intermediaries, reduced verification obligations should apply to all relief procedures, where the risk of abuse is low and in particular where the total amount of the dividend paid to the investor for a shareholding in a company is lower than EUR 1500. Should such abuse be proven otherwise, Member Sta…

RemovedRecital 12: (12) The proper implementation and enforcement of the proposed rules in each Member State concerned is critical for the promotion of the CMU as a whole as well as for the protection of the tax base of Member States and should therefore be monitored by the Commission. Member States should therefore communicate to the Commission on a regular basis, statistical information as specified by means of implementing act, on the implementation and enforcement in their territory of national measures adopted pursuant to this Directive. The Commission should prepare an evaluation on the basis of the information provided by Member States and other available data to evaluate the effectiveness of the proposed new rules. In this context the Commission should consider the need to update the rules introduced by virtue of this Directive.

RemovedRecital 14: (14) Any processing of personal data carried out within the framework of this Directive should comply with Regulation (EU) 2016/679 of the European Parliament and of the Council. Financial intermediaries and Member States may process personal data under this Directive solely with the objective of serving a general public interest, namely for the purposes of combating tax fraud, tax evasion and tax avoidance, safeguarding tax revenues and promoting fair taxation, which strengthen opportunities for social, political and economic inclusion in Member States. Only entities participating in the WHT relief procedures under this Directive should have access to those data. Only the minimal amount of personal information required to identify underreporting, non-reporting, tax fraud, or abuse should be sent. Lastly, personal information should only be retained for as long as required for that purpose. To allow the effective pursuit of this objective, it is necessary to restrict certain rights of individuals provided by the aforementioned Regulation, insofar as the exercise of such rights may jeopardize investigations, especially the right to be notified on the processing of their data and the scope thereof as well as the right to consent on certain types of data processing. As soon as the circumstances that justified the restriction no longer apply, the rights of the data subjects should be reinstated.

RemovedRecital 16 a (new): (16a) This Directive should be reviewed regularly with the aim of further facilitating withholding tax relief for retail investors.

RemovedArticle 3 – paragraph 1 – point 19: (19) ‘double tax treaty’ means an agreement or convention that provides for the elimination of double taxation of income, and where applicable, capital, in force between two (or more) jurisdictions.

RemovedArticle 4 – paragraph 2 – introductory part: 2. Member States shall issue the eTRC based on the available information within three working days from submission of a request, subject to paragraph 4. The eTRC shall comply with the technical requirements of Annex I and shall include the following information:

RemovedArticle 4 – paragraph 2 – point a: (a) the first and last name of the taxpayer and the date and place of birth, if the taxpayer is an individual, or its name and its European Unique Identifier number (EUID), if the taxpayer is an entity, where available;

RemovedArticle 4 – paragraph 2 – point f a (new): (fa) the double tax treaty;

RemovedArticle 4 – paragraph 2 – point g: deleted

RemovedArticle 4 – paragraph 4: 4. If more than five working days are required to verify the tax residency of a specific taxpayer, the Member State shall inform the person requesting the certificate of the additional time needed and the reasons for the delay that, in any case, shall be no longer than five working days.

RemovedArticle 4 – paragraph 5: 5. Member States shall recognise an eTRC issued by another Member State as adequate proof of residence of a taxpayer in that other Member State in accordance with paragraph 3. In any case, Member States may prove the residence for tax purposes in their jurisdictions.

RemovedArticle 4 – paragraph 5 a (new): 5a. Member States shall take the appropriate measures to require an individual or entity deemed resident in their jurisdiction for tax purposes to inform tax authorities issuing the eTRC about any change that could affect the validity or the content of the eTRC.

RemovedArticle 4 – paragraph 6: 6. The Commission shall adopt implementing acts laying down standard computerised forms in machine-readable format, including the linguistic arrangements, and technical protocols, including security standards, for the issuance of an eTRC. Those implementing acts shall be adopted in accordance with the examination procedure referred to in Article 18.

RemovedArticle 5 – paragraph 4 – point d a (new): (da) information on the fees charged for the provision of services under this Directive.

RemovedArticle 7 – paragraph 1 – introductory part: 1. Member States shall ensure that a financial intermediary is registered in their national register of certified financial intermediaries within two months from submission of a request of the financial intermediary that provides evidence of all of the following requirements:

RemovedArticle 7 – paragraph 1 – point b: (b) if the requesting financial intermediary is a credit institution, an authorisation in the jurisdiction of residence for tax purposes to perform custodial activities under points (12) or (14) of Annex I of Directive 2013/36/EU or comparable legislation of a third country; if the requesting financial intermediary is an investment firm, an authorisation in the jurisdiction of residence for tax purposes to perform custodial activities under Section B(1) of Annex I of Directive 2014/65/EU or comparable legislation of a third country or; if the requesting financial intermediary is a central securities depository, an authorisation in the jurisdiction of residence for tax purposes under Regulation EU 909/2014 or comparable legislation of a third country of residence; the Commission shall issue guidance on minimum standards for comparable legislation;

RemovedArticle 7 – paragraph 2: 2. Financial intermediaries shall notify without undue delay the competent authority of the Member State of any change in the information provided under points (a) to (c), providing the relevant documents where necessary.

RemovedArticle 7 – paragraph 2 a (new): 2a. Member States shall inform all other Member States about rejections of registration as soon as possible, according to Article 9 of Council Directive 2011/16/EU1a on administrative cooperation in the field of taxation. / 1a Council Directive 2011/16/EU of 15 February 2011 on administrative cooperation in the field of taxation and repealing Directive 77/799/EEC (OJ L 64, 11.3.2011, p.1, ELI: http://data.europa.eu/eli/dir/2011/16/oj).

RemovedArticle 8 – paragraph 3: 3. The Member State that removes a certified financial intermediary from its national register shall inform, according to Directive 2011/16/EU, without undue delay all other Member States that maintain a national register according to Article 5, specifying the grounds of the removal according to paragraphs 1 and 2.

RemovedArticle 8 – paragraph 3 a (new): 3a. Member States shall update their national registers to reflect the status of financial intermediaries no longer holding certification. In cases where the removal as a certified financial intermediary results from a decision by a Member State, the specific reasons for such action shall be clearly indicated in the register.

RemovedArticle 9 – paragraph 1: 1. Member States shall take the necessary measures to require certified financial intermediaries in their national register to report to the competent authority the information referred to in Annex II as soon as possible within a maximum of 20 calendar days after the record date, unless a settlement instruction in respect of any part of a transaction is pending on the record date, in which case the reporting for that transaction shall take place as soon as possible after the settlement. If 15 days after the record date, settlement is still pending for any part of the transaction, certified financial intermediaries shall report within the next 5 calendar days indicating the part for which settlement is pending.

RemovedArticle 9 – paragraph 2: 2. Member States shall provide that certified financial intermediaries do not need to report information referred to in Annex II, heading E, if the total dividend paid to the registered owner on the owner’s shareholding in a company does not exceed EUR 1500.

RemovedArticle 9 – paragraph 5: 5. Member States shall require certified financial intermediaries in their national register to keep the documentation supporting the information reported for six years and to provide access to any other information, as well as access to their premises for the purpose of audit and shall require certified financial intermediaries to delete or anonymise any personal data included in such documentation as soon as the audit has been completed and at the latest six years after reporting.

RemovedArticle 10 – paragraph 2 – point a: (a) the dividend has been paid on a publicly traded share that the registered owner acquired within a period of five days before the ex-dividend date;

RemovedArticle 10 – paragraph 3 a (new): 3a. The control powers of Member States, pursuant to their national legislation, on the taxable income to which the relief was applied, shall not be limited.

RemovedArticle 11 – paragraph 1 – introductory part: 1. Member States shall take the necessary measures to ensure that the certified financial intermediary requesting relief under Article 12 and/or 13 on behalf of a registered owner obtains from such registered owner a declaration that the registered owner:

RemovedArticle 11 – paragraph 1 – point a: (a) is the beneficial owner of the dividend or interest as defined under the national legislation of the source Member State or a double tax treaty; and

RemovedArticle 11 – paragraph 2 – introductory part: 2. Member States shall take the necessary measures to ensure certified financial intermediaries requesting relief under Article 12 and/or 13 on behalf of a registered owner to verify:

RemovedArticle 11 – paragraph 2 – point a a (new): (aa) the risks of residence and citizenship by investment schemes that present a potentially high risk, as identified by the Organisation for Economic Co-operation and Development (OECD), associated with the possible misuse by the registered owners of an eTRC issued by Member States or third countries which offer such schemes;

RemovedArticle 11 – paragraph 2 – point d: (d) in case of a dividend payment and based on the information available to the certified financial intermediary, the possible existence of any financial arrangement that has not been settled, expired or otherwise terminated at the ex-dividend date, unless the dividend paid to the registered owner for each group of identical shares held does not exceed EUR 1500.

RemovedArticle 11 – paragraph 2 a (new): 2a. Member States may allow to obtain the declaration according to paragraph 1 and to carry out the verifications according to paragraph 2 on an annual basis and, on an ad hoc basis, when there are reasons to assume a change of circumstances or incorrect or unreliable information.

RemovedArticle 11 – paragraph 3 a (new): 3a. The Commission is empowered to adopt guidelines for the fulfilment of the requirements laid down in paragraph 2.

RemovedArticle 13 – paragraph 1: 1. Member States may allow certified financial intermediaries maintaining a registered owner’s investment account to request a quick refund of the excess withholding tax, on behalf of such registered owner in accordance with Article 10 if the information referred to in paragraph 3 of this Article is provided within 25 calendar days from the date of payment of the dividend or interest.

RemovedArticle 13 – paragraph 2: 2. Member States shall process a refund request made in accordance with paragraph 1 within 25 calendar days from the date of such request or from the date reporting obligations under this Directive have been met by all relevant certified financial intermediaries, whichever is the latest. Member States shall apply interest in accordance with Article 14 on the amount of such refund for each day of delay after the 25th day, unless the Member State has reasonable doubts on the legitimacy of the refund request.

RemovedArticle 13 – paragraph 3 a (new): 3a. Member States may reject a refund request if any verification procedure or tax audit, based on risk assessment criteria and according to the national legislation, is initiated.

RemovedArticle 15 – paragraph 1: Member States shall adopt appropriate measures to ensure that where Article 12 and Article 13 do not apply to dividends, because the conditions of this Directive are not met, a registered owner or its authorised representative requesting for refund of the excess withholding tax on such dividends provides at least the information required under Annex II, heading E, unless the total dividend paid to the registered owner on the owner’s shareholding in a company does not exceed EUR 1500, and unless this information has already been provided in accordance with the obligations of Article 9.

RemovedArticle 18 a (new): Article 18a / Monitoring and exchange in information / 1. To ensure the integrity of the internal market the European Securities and Markets Authority (ESMA) and the European Banking Authority (EBA) shall regularly monitor the risk for cum-cum and cum-ex in the Union. / 2. Member States shall introduce coordinated cooperation and mutual assistance between national competent authorities, tax authorities and other law enforcement bodies, such as the European Public Prosecutor’s Office (EPPO) to detect and prosecute illegal withholding tax reclaim schemes.

RemovedArticle 19 – title: General evaluation, review and revision

RemovedArticle 19 – paragraph 1: 1. The Commission shall examine and evaluate the functioning of this Directive, after national rules transposing the Directive come into effect, every five years. A report on the evaluation of the Directive and on the applicable rules to withholding taxes in the Member States, including on a potential need to amend specific provisions of this Directive, will be submitted to the European Parliament and the Council by December 2031 and every 5 years. In the evaluation report, the Commission shall:

RemovedArticle 19 – paragraph 1 – point a (new): (a) examine further possible measures to facilitate self-processed withholding tax claims for small investors who engage directly with tax authorities without the intermediation of certified financial intermediaries;

RemovedArticle 19 – paragraph 1 – point b (new): (b) assess how the procedures for withholding tax relief can be further simplified for retail investors;

RemovedArticle 19 – paragraph 1 – point c (new): (c) conduct a comprehensive analysis of the development of the service fees financial intermediaries charge registered owners for the implementation of the quick refund procedure and the relief at source procedure;

RemovedArticle 19 – paragraph 1 – point d (new): (d) examine whether a relief at source system could be envisaged as a procedure for all Member States; and introduce further measures to facilitate such a system for small and medium-sized enterprises;

RemovedArticle 19 – paragraph 1 – point e (new): (e) examine whether Member States are still impacted by or prone to dividend arbitrage and dividend stripping schemes such as the cum-ex and cum-cum schemes and whether existing measures within the field of withholding taxes are sufficient to combat tax fraud, tax evasion and tax avoidance or whether additional ones would be necessary, such as subjecting capital gains upon disposal of shares and security lending fees to taxation equivalent to dividends, as a way to deter and mitigate dividend arbitrage; the Commission shall in that regard collect evidence from Member States receiving support from EBA, ESMA, EPPO, and relevant national competent authorities;

RemovedArticle 19 – paragraph 1 – point f (new): (f) consider further measures, if necessary, to ensure that all dividends, interest, capital gains, royalty payments, professional service payments and relevant contract payments generated in the Union are taxed at least once at an effective rate;

RemovedArticle 19 – paragraph 1 – point g (new): (g) examine the potential of distribution ledger systems or other technological tools to render the system more efficient and fraud proof through better identification of the beneficial owner;

RemovedArticle 19 – paragraph 1 – point h (new): (h) examine possible measures to digitalise relief and refund processes, and claims;

RemovedArticle 19 – paragraph 1 – point i (new): (i) assess the acceptance of electronic or digital signatures and use of e-ID to facilitate the verification process for individual investors.

RemovedArticle 19 – paragraph 1 – subparagraph 1 a (new): Where appropriate, the evaluation report shall be accompanied by a legislative proposal.

RemovedArticle 19 – paragraph 2: 2. Member States shall communicate to the European Parliament and the Commission relevant statistical information for the evaluation referred to in paragraph 1, in accordance with paragraph 3.

RemovedArticle 19 – paragraph 2 a (new): 2a. The European Commission shall in cooperation with Member States actively assess whether this Directive has an impact on risks for tax fraud and abuse, and the impact on tax revenues.

RemovedArticle 19 – paragraph 3: 3. The Commission shall, by means of implementing acts, specify the statistical information to be provided by Member States for the purposes of evaluation and the format and the conditions of communication of that information.

RemovedArticle 19 – paragraph 5: 5. Information communicated to the Commission by a Member State under paragraph 2, as well as any report or document produced by the Commission using such information, may be transmitted to the European Parliament and other Member States. The transmitted information shall be covered by the obligation of official secrecy and enjoy the protection extended to similar information under the national law of the Member State which received it.

RemovedArticle 20 – paragraph 1: 1. Member States shall restrict data subject’s rights under Articles 15 to 19 of Regulation (EU) 2016/679 of the European Parliament and of the Council45, insofar as the exercise of such rights may jeopardise investigations and only to the extent and only as long as it is strictly necessary for their competent authorities to mitigate the risk of tax fraud, evasion or avoidance in Member States, in particular by verifying that the correct withholding tax rate is applied for the registered owner, or by verifying that the registered owner obtains the relief if so entitled in a timely manner. The rights of the data subjects shall be restored as soon as the conditions that supported the restriction cease to exist.

RemovedArticle 20 – paragraph 3: 3. Information, including personal data, processed in accordance with this Directive shall be retained only as long as necessary to achieve the purposes of this Directive, in accordance with each data controller’s domestic rules on statute of limitations, but in any case no longer than 5 years.

AddedHowever, given fundamental differences between the 19 June 2023 text of the Commission on which the Parliament was initially consulted and the text unanimously agreed in Council, the latter decided to re-consult the Parliament.

AddedAccording to the agreed text by the Council, the directive will introduce a common EU digital tax residence certificate (eTRC) and two fast-track procedures complementing the existing standard refund procedure for withholding taxes, as proposed by the Commission. However, the deadlines for the issuance of the eTRC and the quick refund system have been prolonged, making the tax relief ‘less fast’ than originally foreseen by the Commission’s proposal.

AddedA key change is the exemption provided to Member States who already have a comprehensive relief-at-source system in place and who have a relatively small financial market, i.e. when their market capitalisation ratio is below a threshold of 1,5% (as reported by ESMA).

AddedThe Directive further introduces a reporting obligation for financial intermediaries, who will have to register in national registers established pursuant to this Directive in order to be able to request the fast-track procedures. The Council agreed to create a European Certified Financial Intermediary Portal to simplify the procedure.

AddedFinally, the Council agreement extends the original deadline for the entry into force of 1 January 2027, as foreseen by the Commission’s proposal, to 1 January 2030.

AddedIn its letter requesting re-consultation, the Council is asking the Parliament to deliver its opinion as soon as possible and by 31 January 2024 at the latest. This is because Member States want to start working, together with tax authorities, the Commission and business stakeholders, on implementing acts. These implementing acts should, for instance, lay down standard computerised forms, including the linguistic arrangements, and technical protocols, including security standards, for the EU-wide eTRC.

AddedThe text agreed in the Council, although not fully in line with the EP opinion, still introduces a faster tax relief process compared to the current situation. The introduction of an electronic tax residency certificate (eTRC) was supported by the Parliament, Council, and the Commission.

AddedOverall, the deal struck by the Council is not only a step in the right direction towards facilitating cross-border investments and completing the Capital Markets Union (CMU). It also introduces some important measures to detect potential tax fraud or abuse in relation with withholding taxes.

AddedHowever, it is regrettable that the Council decided to postpone the entry into force until 2030, given the current importance of the completion of the CMU, as recently highlighted by the reports by Mario Draghi and Enrico Letta. In view of legal certainty and citizens’ interest to have a faster withholding tax refunding process, the Council should adopt quickly the COM(2023)0324 proposal on Faster and Safer Relief of Excess Withholding Taxes.

AddedTaking into account the time needed to transpose the Directive in Member States’ legislation and the political will to speed up its adoption, your rapporteur proposes that Parliament approves the proposal without amendments pursuant to a simplified procedure without amendments (rule 52).