Activities of José GUSMÃO related to 2023/0187(CNS)
Shadow reports (1)
REPORT on the proposal for a Council directive on Faster and Safer Relief of Excess Withholding Taxes
Amendments (45)
Amendment 18 #
Proposal for a directive
Recital 1
Recital 1
(1) Ensuring fair taxation in the internal market and the good functioning of the Capital Markets Union (CMU) are political priorities for the European Union (EU). In this context, removing obstacles to cross-border investment, while combating tax fraud and abuse is critical. Such obstacles exist, for example, through inefficient and disproportionately burdensome procedures to relieve excess taxes withheld at source on dividend or interest income paid on shares or bonds traded publicly to non-resident investors. In addition, the status quo has proven inadequate in preventing recurring risks of tax fraud, evasion and avoidance, as shown by the recent Cum/Ex and Cum/Cum scandalsThe status quo has proven inadequate in preventing recurring risks of tax fraud, evasion and avoidance, as shown by the recent Cum/Ex and Cum/Cum scandals. It is estimated that these two have imposed a total cost to taxpayers of about EUR 140 billion between 2000 and 2020. This proposal seeks to make EU withholding tax procedures more efficient, while strengthening them against the risk of tax fraud and abuse. It draws on relevant previous actions at EU and international level, such as the 2009 Commission Recommendation on the simplification of withholding tax procedures and the OECD’s Treaty Relief and Compliance Enhancement (TRACE) initiative28 . _________________ 28 Commission Recommendation of 19 October 2009 on withholding tax relief procedures (Text with EEA relevance) (OJ L 279, 24.10.2009, p. 8–11).
Amendment 22 #
Proposal for a directive
Recital 2
Recital 2
Amendment 24 #
Proposal for a directive
Recital 2 a (new)
Recital 2 a (new)
Amendment 28 #
Proposal for a directive
Recital 3
Recital 3
(3) To ensure a proportionate approach, rules regarding the procedures to relieve excess withholding taxes should be binding only on thoseRecent research1a shows large differences in the application of withholding taxes in EU Member -States that apply withholding tax on dividends at different rates depending on the specific investor’s tax residence. In this case, Member States need to provide relief where a higher rate has been applied in a situation for which a lower rate is applicable. In addition, Member St- the rates can vary between 0 and 35% - and points to the fact that withholding tax rates in tax treaties should have the opportunity to implement similar procedures in relation to interest payments to non-residents on publicly traded bonds, to improve the efficiency of the relevant relief procedure and ensure a higher level of taxpayers’ compliance. Member States that do not need relief procedures in relation to excessare often 5 to 10 percentage points lower than the standard rates. In particular, Cyprus, Hungary, Latvia and Malta do not levy withholding taxes on neither dividends, and interest, as the case may be, are not concerned by the procedures set out in this Directive and therefore not bound by these rules. Given that investors may be located in any Member State, rules for a common and digital tax residence certificate should apply in all Member States and the same is the case for general and final provisions. or royalties payments and Luxembourg, Netherlands, Norway, Sweden do not levy it on interest and royalties. This situation leads to harmful tax practices. _________________ 1a Van’t Riet M. and A. Lejour, 2020, A Common Withholding Tax On Dividend, Interest And Royalties In The European Union
Amendment 30 #
Proposal for a directive
Recital 5
Recital 5
(5) To fulfil the objective of more efficient reliefimbursement of excess withholding tax, common procedures should be implemented that allow to quickly obtain clear and secure information on the identity of the investor especially in the case of large investor bases, i.e., in relation to investment to publicly traded securities, where identifying the identity of the individual investors is challenging. Such procedures should also, as a second step, allow for the application of the appropriate tax rate at the time of payment (relief at source) or for. Such procedures should also, as a second step, the quick reimbursement of any excess amount of tax paid. Given that cross-border investments usually involve a payment chain of financial intermediaries, relevant procedures should equally allow for the tracing and identification of the chain of intermediaries and hence of the income flow from the issuer of the security until the final recipient, i.e., the sole investor or registered owner. RelevantAll Member States, i.e., those applying withholding tax on income from securities and providing relief for excess tax, should therefore establish and maintain a national register of those financial intermediaries that have a significant role in the payment chain, and once registered require them to report information available to them about the dividend or, interest and royalties payments, if applicable, they handle. The information required should be limited to information that is crucial to reconstruct the payment chain and therefore useful to prevent risk of fraud or abuse, to the extent that such information is available to the reporting intermediary. Member States that apply withholding tax on interest at varying rates and need to engage in similar relief procedures may also consider using the established national register, as the case may be.
Amendment 31 #
Proposal for a directive
Recital 6
Recital 6
(6) As the financial intermediaries most often engaged in the securities’ payment chains are large institutions as defined in the Capital Requirements Regulation (CRR)29 as well as central securities depositories providing withholding tax agent services, these entitThe appropriate solution to these types of abusive tax practices shall be the setting by the Member States of a public registry for financial assets. However, as an intermediary solution, all financial intermediaries should be obliged to request registration on the national registers of Member States established as above. Other financial intermediaries should be allowed to request registration at their discretion. Registration should be requested by the financial intermediary itself by submitting an application to the competent authority designated by the Member State, including evidence that the financial intermediary meets certain requirements. The purpose of the requirements is to verify that the requesting intermediary meets the requirements of relevant EU regulation and supervised for compliance therewith. Where the financial intermediary is established outside the EU, it is required to be subject to legislation in the third country of its residence that is comparable for the purposes of this Directive and the third country of residence is neither on Annex I or II of the EU list of non-cooperative jurisdictions nor on the EU list of high-risk third countries (anti-money laundering list). Compliance of a third country financial intermediary with the relevant EU requirements relates solely for the purposes set out in this Directive and has no impact on the exercising or application of any other rights and obligations under other EU legislation. Once registered, financial intermediaries should be considered “certified financial intermediaries” in the respective Member State and be subject to the relevant reporting and notification obligations under this Directive while granted the right to request application of the relief procedures set out in this Directive. The Member States that maintain a national register should also take action to remove therefrom any certified financial intermediary that so requests or no longer meets the respective requirements. Furthermore, these Member States can decide to provide for the removal from their national register of certified financial intermediaries found to have violated their obligations a number of times. Where a Member State takes such action of removal, it should inform other Member States that maintain a national register accordingly in order to allow them to assess the removal of the same certified financial intermediary from their own national register. National legislation of the Member States concerned applies to the rights and obligations of parties concerned, including for appeal, in relation to any decision taken by a Member State in connection with registration and removal from their national register. _________________ 29 Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) No 648/2012 Text with EEA relevance (OJ L 176, 27.6.2013, p. 1–337)
Amendment 33 #
Proposal for a directive
Recital 7
Recital 7
(7) To ensure greater transparency on the identity and the circumstances of the investor receiving a dividend or interest payment as well as on the flow of the payment from the issuer, certified financial intermediaries should report to the authority designated to maintain the national register, within specific timelines, a relevant set of information. This information should also be reported to the withholding tax agent, where relief at source is possible. This data should include information on the eligibility of the investor concerned, but should be limited to the information that is available to the reporting certified financial intermediary. Financial intermediaries that are not under an obligation to register as certified financial intermediaries and have also opted not to register as such, do not have reporting obligations under this Directive. Nevertheless, information on the payments handled by such intermediaries that are not certified financial intermediaries remains relevant and may be considered necessary by a Member State, at its discretion, to ensure transparency and to allow for the proper reconstruction of the payment chain before applying the relief procedures set out in this Directive (relief at source or quick refund). Therefore, Member States may request that certified financial intermediaries obtain this information from such intermediaries and report accordingly in order for the relief procedures laid out in this Directive to be applicable.
Amendment 34 #
Proposal for a directive
Recital 8
Recital 8
Amendment 38 #
(9) In order to safeguard the systems for relief of excess withholding taxes, Member States maintaining a national register should also require certified financial intermediaries to verify the eligibility of investors that wish to claim a relief. In particular, certified financial intermediaries should collect the tax residence certificate of the relevant investor, and a declaration that such investor is the beneficial owner of the payment according to the legislation of the source Member State. They should also verify the applicable withholding tax rate based on the investor’s specific circumstances and indicate if they are aware of any financial arrangement involving the underlying securities that has not been settled, expired or otherwise terminated at the ex-dividend date. Certified financial intermediaries should be held liable for tax revenue losses that have been incurred due to the inadequate fulfilment of these obligations, to the extent that national law of the Member State where the loss incurred so provides. In order to ensure proportionality of the burden and liability imposed on certified financial intermediaries, reduced verification obligations should apply to all relief procedures, where the risk of abuse is low and in particular where the total amount of the dividend paid to the investor for a shareholding in a company is lower than EUR 1000. Should such abuse be proven otherwise, Member States can however apply consequences under national law, including denying the systems of relief provided in this Directive, but they cannot hold certified financial intermediaries liable for absence of verification.
Amendment 41 #
Proposal for a directive
Recital 10
Recital 10
(10) It is acknowledged that financial arrangements can be used to shift the economic ownership, in whole or in part, of a security and/or relevant investment risks. It has also been evidenced that such arrangements have been used in dividend arbitrage and dividend stripping schemes such as the Cum/Ex and Cum/Cum schemes, with the sole purpose to obtain refunds when there was no entitlement thereto or to increase the amount of refund to which an investor was actually entitled. Information on such financial arrangements, which encompass ordinarily legitimate securities transactions such as repurchase agreements or securities lending, and also derivative products such as single stock futures, is therefore necessary for tax administrations to fight tax abuse. To ensure a proportionate approach, reporting on this information should only be required by those certified financial intermediaries that, due to their position within the chain, may have been directly involved in the relevant financial arrangement. Such reporting is not required in the case of bonds and interest payments.
Amendment 43 #
Proposal for a directive
Recital 13
Recital 13
(13) In order to ensure uniform conditions for the implementation of this Directive, in particular for (i) the digital tax residence certificate, (ii) and the reporting of financial intermediaries and (iii) the request for relief under this Directive, implementing powers should be conferred on the Commission to adopt standard forms with a limited number of components, including the linguistic arrangements. Those powers should be exercised in accordance with Regulation (EU) No 182/2011 of the European Parliament and of the Council30 . _________________ 30 Regulation (EU) No 182/2011 of the European Parliament and of the Council of 16 February 2011 laying down the rules and general principles concerning mechanisms for control by Member States of the Commission’s exercise of implementing powers (OJ L 55, 28.2.2011, p. 13)
Amendment 46 #
This Directive lays down rules on the issuance of a digital tax residence certificate by Member States and the procedure to relievimburse any excess withholding tax that can be withheld by a Member State on dividends from publicly traded shares and, where applicable, interest from publicly traded bonds paid to registered owners who are resident for tax purposes outside that Member State and payments of royalties.
Amendment 47 #
Proposal for a directive
Article 2 – paragraph 2
Article 2 – paragraph 2
The procedures laid down in Chapter III shall apply to all Member States that provide relief of excess withholding tax on dividends paid for publicly traded shares. Member States that provide relief of excess withholding tax, on interest paid for publicly traded bonds may apply Chapter IIIand on royalties.
Amendment 50 #
Proposal for a directive
Article 3 – paragraph 1 – point 3 a (new)
Article 3 – paragraph 1 – point 3 a (new)
(3 a) royalties’ means the payments as defined in Article 2 of Directive 2003/49/EC of 3 June 2003;
Amendment 60 #
Proposal for a directive
Article 4 – paragraph 5
Article 4 – paragraph 5
5. Member States shall recognise an eTRC issued by another Member State as adequate proof of residence of a taxpayer in that other Member State in accordance with paragraph 3. However, if the Member State has a suspicion on the real residence of the taxpayer, the Member State is allowed to ask for additional proof and suspend the recognition of the eTRC in the meantime.
Amendment 64 #
Proposal for a directive
Chapter III – title
Chapter III – title
III WITHHOLDING TAX RELIEFIMBURSMENT PROCEDURE
Amendment 65 #
Proposal for a directive
Article 5 – paragraph 1
Article 5 – paragraph 1
1. Member States that levy a withholding tax on dividends from publicly traded shares paid to registered owners resident for tax purposes outside that Member State and that provide relief of excess withholding tax shall establish a national register of certified financial intermediaries. Member States may opt to use this national register also in relation to relief of excess withholding tax onAll Member States shall establish a national register of certified financial intermediaries, covering dividends from publicly traded shares, interest from publicly traded bonds, if applicable and payments of royalties.
Amendment 67 #
Proposal for a directive
Article 5 – paragraph 2
Article 5 – paragraph 2
Amendment 68 #
Proposal for a directive
Article 5 – paragraph 3
Article 5 – paragraph 3
3. Member States establishing a national register according to paragraph 1 and 2 shall designate a competent authority responsible for maintaining and updating that register.
Amendment 70 #
Proposal for a directive
Article 5 – paragraph 4 – point d a (new)
Article 5 – paragraph 4 – point d a (new)
(d a) (e) detailed financial balance sheet;
Amendment 71 #
Proposal for a directive
Article 5 – paragraph 4 – point d b (new)
Article 5 – paragraph 4 – point d b (new)
(d b) (f) beneficial ownership.
Amendment 72 #
Proposal for a directive
Article 6 – paragraph 1
Article 6 – paragraph 1
1. Member States that maintain a national register according to Article 5 shall require all large institutions as referred to in Article 3(10) that handle payments of dividends and, where relevant, interest on securities and payments of royalties originating in their jurisdictions, and central securities depositories as referred to in Article 3(4) that provide withholding tax agent services for the same payments, to register with their national register.
Amendment 73 #
Proposal for a directive
Article 6 – paragraph 2
Article 6 – paragraph 2
Amendment 75 #
Proposal for a directive
Article 7 – paragraph 1 – point a
Article 7 – paragraph 1 – point a
(a) a residence for tax purposes in a Member State or third country jurisdiction not included on Annex I or II of the EU list of non-cooperative jurisdictions for tax purposes39 nor on the table I of the Annex to Delegated Regulation (EU) 2016/167540 ; _________________ 39 Council of the European Union, Economic and Financial Affairs Council, 14094/16, Brussels 8 November 2016 40 Commission Delegated Regulation (EU) 2016/1675 of 14 July 2016 supplementing Directive (EU) 2015/849 of the European Parliament and of the Council by identifying high-risk third countries with strategic deficiencies (OJ L 254, 20.9.2016, p. 1–4)
Amendment 76 #
Proposal for a directive
Article 7 – paragraph 1 – point c
Article 7 – paragraph 1 – point c
(c) a declaration of compliance with the provisions of Council Directive 2014/107/EU41 or the provisions of Directive 2018/843/EU of the European Parliament and of the Council42 as applicable or with a comparable legislation of a third country jurisdiction not included on Annex I or II of the EU list of non- cooperative jurisdictions for tax purposes or on the table I of the Annex to Delegated Regulation (EU) 2016/1675. _________________ 41 Council Directive 2014/107/EU of 9 December 2014 amending Directive 2011/16/EU as regards mandatory automatic exchange of information in the field of taxation (OJ L 359, 16.12.2014, p. 1–29) 42 Directive (EU) 2018/843 of the European Parliament and of the Council of 30 May 2018 amending Directive (EU) 2015/849 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, and amending Directives 2009/138/EC and 2013/36/EU (OJ L 156, 19.6.2018, p. 43– 74)
Amendment 79 #
Proposal for a directive
Article 8 – paragraph 1 – point a
Article 8 – paragraph 1 – point a
Amendment 86 #
Proposal for a directive
Article 9 – paragraph 2
Article 9 – paragraph 2
Amendment 88 #
Proposal for a directive
Article 9 – paragraph 3
Article 9 – paragraph 3
Amendment 90 #
Proposal for a directive
Chapter III – Section 3 – title
Chapter III – Section 3 – title
3 SYSTEMS OF RELIEFIMBURSMENT
Amendment 91 #
Proposal for a directive
Article 10 – title
Article 10 – title
Request for relief at source or quick refund
Amendment 92 #
Proposal for a directive
Article 10 – paragraph 1 – introductory part
Article 10 – paragraph 1 – introductory part
1. Member States shall require a certified financial intermediary maintaining the investment account of a registered owner receiving dividends or, interest and royalties to request relief pursuant to Article 12 and/or Article 13, on behalf of such registered owner, if the following conditions are met:
Amendment 93 #
Proposal for a directive
Article 10 – paragraph 2 – introductory part
Article 10 – paragraph 2 – introductory part
2. Notwithstanding paragraph 1, Member States shall not provide reliefimbursment under the systems as provided for under Articles 12 and 13 for a request, where:
Amendment 97 #
Proposal for a directive
Article 10 – paragraph 3 – introductory part
Article 10 – paragraph 3 – introductory part
3. Notwithstanding paragraph 1, Member States may exclude requests from reliefimbursment under Articles 12 and 13, where:
Amendment 105 #
Proposal for a directive
Article 11 – paragraph 2 – point d
Article 11 – paragraph 2 – point d
(d) in case of a dividend payment and based on the information available to the certified financial intermediary, the possible existence of any financial arrangement that has not been settled, expired or otherwise terminated at the ex- dividend date, unless the dividend paid to the registered owner for each group of identical shares held does not exceed EUR 1000.
Amendment 109 #
Proposal for a directive
Article 12
Article 12
Amendment 112 #
Proposal for a directive
Article 13 – paragraph 1
Article 13 – paragraph 1
1. Member States may allow certified financial intermediaries maintaining a registered owner’s investment account to request a quick refund of the excess withholding tax, on behalf of such registered owner in accordance with Article 10 if the information referred to in paragraph 3 of this Article is provided as soon as possible after the payment date and at the latest within 25 calendar days from the date of payment of the dividend or , interest or royalties.
Amendment 116 #
Proposal for a directive
Article 13 – paragraph 3 – point c
Article 13 – paragraph 3 – point c
(c) the tax residence of the registered owner and a substancial proof of that it is the benefical owner;
Amendment 117 #
(d a) any other information that is deemed relevant by the Member State to fight potential fraud.
Amendment 120 #
Proposal for a directive
Article 15 – paragraph 1
Article 15 – paragraph 1
Member States shall adopt appropriate measures to ensure that where Article 12 and Article 13 do not apply to dividends, because the conditions of this Directive are not met, a registered owner or its authorised representative requesting for refund of the excess withholding tax on such dividends provides at least the information required under Annex II, heading E, unless the total dividend paid to the registered owner on the owner’s shareholding in a company does not exceed EUR 1000, and unless this information has already been provided in accordance with the obligations of Article 9.
Amendment 122 #
Proposal for a directive
Article 16 – paragraph 1
Article 16 – paragraph 1
1. Member States shall take appropriate measures to ensure that if a certified financial intermediary does not comply, intentionally or negligently, with its obligations under Articles 9, 10, 11, 12 and 13, the certified financial intermediary, the members of the management body and other natural persons who under national law are responsible for the non- compliance, can be held liable for all or part of the loss of withholding tax revenue incurred by the Member State in relation to a request under Article 12 or 133. 2. Member States shall ensure that legal persons can be held liable for the non- compliance with national provisions transposing this Directive by any person acting individually or as part of an organ of that legal person and having a leading position within the legal person. Any of the following circumstances shall indicate the leading position within the legal person: (a) power to represent the legal person (b) authority to take decisions on behalf of the legal person; (c) authority to exercise control within the legal person.
Amendment 123 #
Proposal for a directive
Article 17 – paragraph 1
Article 17 – paragraph 1
1. Member States shall lay down the rules on penalties applicable to infringements of national provisions adopted pursuant to this Directive, and shall take all measures necessary to ensure that they are implemented. These penalties shall be effective, proportionate and dissuasivsufficiently dissuasive. 2. Member States shall ensure that the penalties that can be applied include at least the following minimum pecuniary penalties: (a) EUR 50 000 when the annual turnover of the Certified Financial Intermediary is below EUR 6 million and (b) EUR 150 000 when the turnover is EUR 6 million or above. 3. When deemed appropriate and the financial penalties are considered non- dissuasive, Member States shall establish as penalties, in extreme and repeated cases, the revoking of the business licence.
Amendment 124 #
Proposal for a directive
Article 17 a (new)
Article 17 a (new)
Article17a Minimum effective tax rate The Commission shall by 2026 put forward a legislative proposal to design a framework that ensures a minimum effective tax rate of 30% for intra-EU flows of dividendes, royalties and interests. This framework should incentives Member states to take appropriate measures to ensure this minimum effective tax rate.
Amendment 125 #
Proposal for a directive
Article 17 b (new)
Article 17 b (new)
Article17b Revision of IRD and PSD 1. The Commission shall present a revision of the Interest and Royalties Directive in order to guarantee a minimum effective tax rate and implement strong anti-abuse rules. 2. The Commission shall present a revision of the Parent-Subsidiary Directive in order to guarantee a minimum effective tax rate and implement strong anti-abuse rules.
Amendment 126 #
Proposal for a directive
Article 17 c (new)
Article 17 c (new)
Article17c Public financial asset registry The Commission shall by 2026 put forward a legislative proposal to design a global public asset registry at the European Union level. The objective of the registry would be to record the ownership financial assets. Such a registry will be key to achieve the goals of this Directive but also to set up the minimum tax refeared in 17a.
Amendment 141 #
Proposal for a directive
Article 19 – paragraph 2
Article 19 – paragraph 2
2. Member States shall communicate to the Commission relevant information for the evaluation of the Directive in estimations of tax revenue losses, improving withholding tax relief procedures to reduce double taxation as well as combat tax abuse, in accordance with paragraph 3.