Discover “Ask the Expert”, RAQUEST’s new content series, getting straight to the point and making sure withholding tax specialists break down intricate topics into easy-to-grasp insights. We bring together esteemed professionals from the withholding tax industry, asking them five in-depth questions on diverse arrays of subjects. Check out this brief but insightful format, which in the future will feature a line-up of distinguished leaders from the withholding tax industry, diving deep into a broad variety of topics.
First up is Herbert Dorfmann, member of the European Parliament and part of the European Economic and Monetary Affairs Committee (ECON), uncovering some FASTER insights.
Herbert Dorfmann has been working on the successful implementation of the FASTER Directive for years. On 14th of October, he presented his report on the draft Council Directive on Faster and Safer Relief of Excess Withholding Taxes as rapporteur to the ECON Committee. Finally, on November 14, the European Parliament voted with a clear majority to approve his Report – a further successful step in the process of advancing FASTER’s implementation.
Following the latest FASTER developments there, he answered five key questions for us:
At its next plenary session on November 13th and 14th, the Parliament will adopt the Council’s position through a simplified procedure. Following this, the Council will be set to formally adopt its position, as planned, by January 31, 2025, at the latest.
The introduction of the eTRC is undoubtedly one of the most significant achievements of the new legislation. The implementation of a common electronic tax residence certificate will expedite and harmonize lengthy, predominantly paper-based procedures. The eTRC must be accepted by all tax authorities within the EU. To facilitate this, the Commission will adopt implementing acts to provide all the necessary technical details for the digital design of the eTRC.
Certainly, there is a risk that financial intermediaries may perceive the liability risks under the FASTER Directive as too high, which could lead to the discontinuation of certain services to avoid falling within the scope of the directive. However, I personally believe that the European Commission will take steps to mitigate such risks. The extended implementation period for FASTER, which now runs until 2030, provides ample time to prepare technical guidelines and other supporting materials aimed at ensuring a uniform and harmonized interpretation of the Directive throughout the EU. Initiatives to promote cross-border investments within the framework of the Capital Markets Union are fundamentally intended to encourage offering investors new investment opportunities, rather than withdrawing services.
Contrary to our Parliament’s position, the Council has introduced these exemptions and considers them reasonable, as the relevant countries either already have well-functioning refund systems or their financial markets are too small for large-scale fraud cases. Differences between Member States persist, and this certainly does not contribute to harmonization within the EU.
It is certainly correct that stakeholders from third countries also have a significant interest in the FASTER Directive. The Commission is planning a strategy for stakeholder engagement, which aims to involve both EU and non-EU financial intermediaries who may be affected by the Directive. However, the details of this strategy are still unclear at present. Such initiatives can only be fully developed and implemented once the Council has completely adopted the Directive.
You can find more information and official documents regarding the adopted Directive here:
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About RAQUEST
RAQUEST is a leading German Fintech company specializing in withholding tax management for financial institutions. As part of the Halvotec Group, RAQUEST has been providing innovative software solutions for efficient withholding tax processing in over 35 investment markets for more than 15 years. The modular B2B software supports all common tax relief procedures and navigates complex, global tax landscapes. With a client portfolio of over 30 renowned financial institutions, including Berenberg, Commerzbank, and DZ Bank, RAQUEST has established itself as a market leader in withholding tax processing. The company is a member of key industry associations and is strategically guided by a high-profile advisory board, which includes notable figures, such as Peer Steinbrück and Karl von Rohr. RAQUEST enables financial institutions to meet regulatory requirements, increase efficiency, and reduce costs while maximizing investor returns.
For more information: raquest.tax
