EU: EU exec proposes new withholding tax rules to attract investors

The European Commission on Monday proposed changes to the way investors pay withholding tax in the European Union, to attract more cross-border trade in securities and help develop the bloc’s capital market.

The Commission’s proposal is to make sure cross-border investors pay the correct amount of withholding tax from the start or that they get any refund to which they are entitled quickly.

“Refund procedures are often lengthy and costly. This creates immense frustration: studies show that close to 70% of retail investors who would be eligible to a reduced withholding tax rate do not claim it,” European Economic Commissioner Paolo Gentiloni said.

“It also drives investment away from the EU. According to a recent study, 30% of retail investors have sold their EU portfolio because of this tax barrier. This is a situation we cannot afford to see continue,” he said.

The Commission proposed to standardise withholding tax procedures which currently differ across the 27-nation bloc, split between either a “Relief at Source” or a “Quick Refund System” available to all investors. EU governments could choose which one they want to apply.

In the “relief at source” system, the appropriate withholding tax rate would be applied at the moment a dividend on shares bought by the investor was paid.

Under the quick refund procedure, the investors would still pay an excessive tax, but would get a refund no more than 50 days later.

“The proposal will make life easier for investors by massively shortening the refund procedure and giving them a further incentive to claim the money they are owed,” Gentiloni said. “In fact, we estimate that our proposal will save investors an estimated 5.17 billion euros per year thanks to the fast-track procedures,” he said.

The Commission hopes the changes will encourage more investors from outside the EU to invest in European securities and also boost intra-EU trade in shares and bonds, which would help develop the EU’s capital market, needed to provide financing for the bloc’s transition to renewable energy sources.

16 February 2024

FAMILY OFFICES: Family offices are going on the offensive, trading cash for alternative assets

KKR’s family office survey of 75 chief investment officers around the world found that family offices will have 52% of their portfolios invested in alternative investments this year, up from 42% in

Read More
7 June 2024

UAE: UAE Confiscates $356 Mln from Money Launderers

Hamid Al Zaabi, Director-General of the Executive Office of Anti-Money Laundering and Counter-Terrorism Financing (EO AMLCTF), revealed that the UAE confiscated more than AED 1.3 billion ($356 million)

Read More
26 April 2024

CARIBBEAN: Caribbean countries set a threshold of 2 lakh dollars for Citizenship by Investment programs

Citizenship by Investment (CBI) schemes offer foreign citizens citizenship or resident rights in exchange for local investments or a flat fee in many countries. Citizenship by investment allows affluent

Read More
24 May 2024

SWITZERLAND: Switzerland strengthens anti-money laundering framework

New measures to tackle money laundering, tax evasion and terrorist financing are likely to come into effect in early 2026. The Swiss Federal Council has adopted a series of measures to be submitted

Read More