The Council Directive (EU) 2025/50 establishes a new framework for faster and safer relief of excess withholding taxes on cross-border investments in the EU. The directive aims to make withholding tax procedures more efficient while strengthening protections against tax fraud and abuse.The key elements of the directive include:
- Introduction of a digital tax residence certificate (eTRC) system to standardize proof of tax residency across the EU
- Creation of national registers of certified financial intermediaries who can request tax relief on behalf of investors
- Establishment of common relief-at-source and quick refund systems for excess withholding taxes
- New reporting requirements for financial intermediaries to provide information about dividend/interest payments and payment chains
- Special provisions for indirect investments through collective investment vehicles
The main provisions that will affect implementation include:
- Member States must establish digital systems for issuing eTRCs by December 31, 2028
- Financial intermediaries must register and comply with due diligence and reporting obligations
- Tax authorities must process quick refund requests within 60 days
- Member States can exclude high-risk cases from fast-track relief procedures
- Certified intermediaries can be held liable for tax revenue losses due to non-compliance
- The directive will apply from January 1, 2030
