Debate: European Withholding Tax framewor
Date: WEDNESDAY, 9 MARCH 2022
Speaker: Paolo Gentiloni
Language: EN

You know that we announced in our action plan in July 2020 that further work is needed after many initiatives in this area failed to remove the hurdles that cross-border investors face to receive their refund from the source country. Furthermore, greater transparency towards the tax authorities is required from the so-called financial intermediaries to ensure that the correct amount of tax is levied and that not too much is being refunded.  So the Commission is committed to present a proposal that would take away the hurdles and make the procedures more efficient, and at the same time prevent the risk of fraud. Our services are now gathering input from stakeholders and from tax administrations. Our intention is to launch a public consultation soon. These contributions will feed into the design of the proposal. The points raised by your report are, in this respect, very timely in informing our work.  At this stage, I can say that we are looking into ways to ensure greater transparency and digitalisation. This could include developing minimum common standards of data that will need to be provided to tax authorities, using digital tools to perform risk management and EU wide registry for approved financial intermediaries or an EU-approved digital tax residency certificate. Ideally, the tax authorities of the Member States will have access to the required data in a manner that allows for quick processing and should result in a relief at source or a refund with minimal effort performed both by the investor and the tax administration. Moreover, the need to maintain a coherent and consistent approach to aggressive tax planning remains our top priority. The Commission sees positively the entry into force of some measures, for example, in 2021 new withholding tax measures in the Netherlands, and we also welcome the commitments taken by Ireland and Cyprus in their recovery and resilience Plans to act against the erosion of the EU tax base through royalty interest or dividend payments that can exit the EU potentially untaxed because of the absence of withholding taxes. Nonetheless, we know that this is not enough and we will continue to closely monitor and to intervene by all possible means to address the issue of aggressive tax planning and distortion of the single market through payment exiting the EU and tax.  As regards the EU listing process, on previous occasions I welcome your support in inviting Member States to introduce defensive measures against countries that do not cooperate with the EU on tax matters. Today, I can confirm that your pledge has been taken into account with very few exceptions. All Member States currently apply agreed measures vis-a-vis listed countries.  To conclude, I would like to reiterate how much the global agreement is important for us and also the implementation of the Pillar Two. We are sparing no efforts to support the French Presidency, and we know that the European Parliament is also already dealing with this fight. So let me thank you, Honourable Member Marques, for providing useful ideas and recommendation exactly in this moment to our work and to our common initiative.