The October 2007 Ecofin Council has agreed on the need to adopt actions for the removal of legal and fiscal barriers identified in the “Giovannini Report”. The Report has underlined that many differences exist in the procedures used in the various Member States to collect, or grant relief from, withholding tax. In particular, even if total or partial relief is granted, eligible investors may be required first to suffer the tax and subsequently reclaim it. In addition, procedures applicable to repayment of withholding tax can be very complex and may also differ considerably across Member States. According to the report, such complexities and differences significantly increase the cost of crossborder settlement.
The actions to be adopted should be based on the results of the works of the Commission’s Clearing and Settlement Fiscal Compliance (“FISCO”) expert group, set up with the mandate to advise on the removal of fiscal compliance barriers to the clearing and settlement of cross-border securities transactions within the EU.
In particular, the Ecofin council has agreed that the removal of legal and fiscal barriers identified in the “Giovannini Report” is a key priority and considers that concrete actions and a timeframe should be proposed promptly by the Commission.
To this end, the Commission has the intention to adopt a Recommendation on withholding tax procedures by early 2009 taking into account the need to both simplify and improve overall tax efficiency.
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