How the EU enhances your cross-border investing experience and protects you from the double taxation

Summary:

  • Thanks to the new EU FASTER directive you will be protected from the double taxation on dividends and interest payments.
  • The directive is set to transform how withholding taxes are handled, ensuring that you benefit from a more streamlined and secure process.
  • The EU digital tax residence certificate (eTRC) will empower you to quickly establish your tax residency, enabling you to enjoy reduced withholding taxes on dividends and interests from cross-border securities more easily.
  • The standardized reporting obligations for financial intermediaries, such as banks and investment platforms enhances transparency but also supports national tax authorities in their efforts to combat tax fraud.
  • EU member states are required to transpose this directive into national legislation by December 31, 2028.
  • The national rules will be applicable from January 1, 2030.
  • The FASTER directive was published in the Official Journal of the European Union on 10 January 2025 and is available by clicking here.


The new FASTER directive


The European Union has taken a significant step to enhance your investing experience and protect you from the double taxation on dividends and interest payments. Recognizing the challenges you face with cross-border financial investments, the EU Council, on December 10th, adopted the new FASTER directive – short for "Faster and Safer Tax Excess Relief."

The FASTER directive was published in the Official Journal of the European Union on 10 January 2025 and is available by clicking here.


Innovative


This innovative directive is set to transform how withholding taxes are handled, ensuring that you benefit from a more streamlined and secure process. Under the new FASTER directive, you'll find relief through two expedited procedures: the "relief-at-source" and the "quick refund" system. These are designed to accelerate the tax relief process, making it more uniform across EU member states.


Certificate


A standout feature of the FASTER directive is the introduction of a common EU digital tax residence certificate (eTRC). This certificate will empower you to quickly establish your tax residency, enabling you to enjoy reduced withholding taxes on dividends and interests from cross-border securities more easily.


Standardized reporting


Furthermore, the directive includes standardized reporting obligations for financial intermediaries, such as banks and investment platforms. This measure not only enhances transparency but also supports national tax authorities in their efforts to combat tax fraud.


Implementation Timeline


To aid in the smooth registration and compliance of financial intermediaries, the Council has established a European Certified Financial Intermediary Portal. This portal promises a more integrated and efficient EU-wide system.

The member states are required to transpose the directive into their national legislation by December 31, 2028, with the rules set to be applied from January 1, 2030. This legislative development is a positive stride towards harmonizing tax processes across the EU, significantly boosting your confidence in the fairness and efficiency of European financial markets.

As an investor, these changes mean a more straightforward, safer, and potentially more profitable investing environment in the EU.


Need advice?


Feel free to contact our experts at BDO: Bruno Orban or Michaël Vangenechten.