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 national registers of certified financial intermediaries by December 31, 2028
- The directive applies to withholding taxes on dividends from publicly traded shares and optionally to interest from publicly traded bonds
- Financial intermediaries must verify investor eligibility and report detailed payment information
- Quick refunds must be processed within 60 days with interest penalties for delays
- Member States can exclude high-risk cases from fast-track relief procedures
- The directive includes liability provisions for intermediaries who fail to comply with obligations
