Witholding taxes (WHT) – AFEP’s contribution to the European Commission’s consultation

AFEP responded to the European Commission’s public consultation on a new European system to avoid double taxation and prevent tax abuse in the area of withholding taxes.

AFEP strongly supports this new initiative of the European Commission on the condition that it allows companies established in the EU to automatically benefit from the advantages resulting from European directives, contractual provisions or national legislations (abolition or reduction of WHT rate).

AFEP main points and remarks in its contribution to the consultation are:

  • Businesses dissatisfaction with the current situation on the practice of the elimination of the double taxation attached to WHT within the EU (procedures are often long and costly)
  • Importance of the topic for companies that bear double taxation likely to be eliminated only after long and costly procedures. It is also a subject of competitiveness of European companies and attractiveness of the EU.
  • Request for the abolition of WHT within the EU: WHT are an obstacle to the good functioning of the capital market and constitute a restriction on the fundamental freedoms provided for by the treaties.
  • Broaden the subject to all income likely to bear WHT (dividends, interest, remuneration for services rendered, capital gains on securities) and all associated or non-associated transactions.
  • Three measures to implement:
    • the standardization of the residence certificate and reimbursement requests is a self-evident measure and constitutes a minimalist improvement;
    • the digitization of requests for tax residence certificates and requests for reimbursement;
    • the use of a single web portal to which an investor could connect to submit a request for reimbursement regardless of the Member State of the source.
  • Relaunch discussions on the consensual aspects of the revision of the “interest and royalties” directive (reduction of the participation rate and extension of its benefit to SAS companies)
  • Rule out any creation of new reporting obligations for companies.
AFEP’s contribution to the European Commission’s consultation on withholding taxes