Date: 5th October 2016
Author:
Type: In the news
This is not a given, since those Member States currently avoid refunding or granting tax treaty relief at source for more than €6 billion per year according to the European Commission.
In support of the Capital Markets Union initiative, this new Code of Conduct aims to reduce the barriers hampering cross-border investments for (individual) investors by reducing the double taxation when the investor is taxed at the source of the dividend as well as at the destination (the investor’s country of residence). This double taxation arises for two main reasons:
- the WHT is actually higher than the reduced WHT rate in the bilateral tax treaty (i.e. no actual relief at source), forcing the investor to try to get a refund for this excess tax from the originating Member State.
- the Member State of residence does not allow the investor to deduct the WHT paid according to the tax treaty from the tax on his investment income. This is the case in Belgium where dividends sourced from other Member States are de facto taxed at a rate of 40.5% instead of 30% for Belgian-sourced dividends. The Code does unfortunately not address this serious issue.
Read the full press release here.