On 14 May 2024 the EU Finance Ministers reached agreement on the Faster and Safer Relief of Excess Withholding Taxes (FASTER) Directive. The FASTER compromise proposal seeks to address the problems of double taxation and administrative burden, as well as tax fraud and abuse that can be linked to securities investments, hampering development of the Capital Markets Union (CMU). Although the EU Parliament had already reached consensus approving the proposal, the number of changes made to the proposal in recent months means that the Parliament will need to be consulted again on the updated proposal.
The aims and ambition of the FASTER Directive are clear – that of a faster and safer relief mechanism that would apply broadly across all EU markets, contributing to the CMU. Some elements, such as the creation and delivery of a common digital tax residence certificate (eTRC), clearly will be beneficial and hopefully will be adopted quickly.
On other parts of the proposal, it has been difficult (or impossible) to secure unanimous approval. Therefore, there have been a number of compromises, such as the introduction of the market capitalisation ratio, which means the implementation will not be uniform or ubiquitous. Also, the push back of the start date to six years from now is disappointing.
Read more in this PwC Tax Policy Alert.