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PensionsEurope position paper on the EC's proposal for a withholding tax directive - 2023

PensionsEurope welcomes the European Commission's proposal for a Faster and Safer Relief of Excess Withholding Taxes (FASTER). As cross-border investors, with 2.4 trillion euros of assets for EEA institutions for occupational retirement provision (IORPs) at the end of 2022, pension funds bear witness to investment barriers and costs within the single market which ultimately impact negatively pension fund members and beneficiaries. Indeed, refund requests or exemption requests are often an extensive and burdensome process, with different procedures and requirements among Member States. This proposal could foster institutional investment among Member States by improving withholding tax relief procedures which would allow pension funds to reinvest excess withholding taxes.

However, we also have reservations to express and suggestions to improve the proposal. FASTER procedures should be available to fiscally transparent investment entities, which are used for the majority of investments by institutions for occupational retirement provision. We indicate that liability over information that the investor must provide to the Certified Financial Intermediary (CFI) should be transferred from the CFI to the investor, to make FASTER work in practice. Possibilities to deviate from FASTER should be constrained.