ABBL’s position on the Proposal for a Faster and Safer Relief of Excess Withholding Taxes

ABBL’s position on the Proposal for a Faster and Safer Relief of Excess Withholding Taxes, released by the European Commission on 19 June 2023, is one of cautious support with significant concerns. The ABBL acknowledges the proposal’s objective of simplifying, digitizing, and harmonizing withholding tax processes in the EU, a long-standing priority for the organization.
While the ABBL welcomes the introduction of more efficient withholding tax procedures for cross-border securities income, they express reservations regarding the potential burdens on financial intermediaries and the associated liabilities. They emphasize the need for greater proportionality and simplification of obligations for financial intermediaries, advocating for a non-mandatory procedure and increased harmonization of processes within the EU.
The ABBL appreciates the proposal’s inclusion of the eTRC, as it addresses current inefficiencies in refunding excess withholding tax, a barrier to cross-border investment and the creation of a single capital market within the EU.
However, the ABBL is concerned that the proposed sanctions for non-compliance, particularly for Certified Financial Intermediaries, could discourage financial institutions from participating in the „fast track“ procedures. They emphasize that the administrative burden and associated costs may deter medium and small-sized institutions from complying with the extensive due diligence and reporting obligations.
The ABBL stresses that the objective of simplification and speed should not result in an excessive layer of tax reporting obligations. They propose a revised timeframe for implementation, suggesting that the provisions take effect 18 months after each Member State’s deadline for transposing them into national law (1 July 2028), allowing financial intermediaries sufficient time to establish the required procedures.
Therefore, the ABBL supports the proposal’s goals but seeks a balance between simplification and the potential burdens on financial sector players, advocating for greater proportionality, harmonization, and a reasonable implementation timeline to ensure a smooth transition.