During the economic and financial affairs (Ecofin) meeting in Brussels on Tuesday 14 May 2024, the ministers of finance of the European Union on the Faster proposal, an initiative aimed at removing existing tax barriers to the capital markets union (CMU). This directive has the potential to harmonise tax procedures across EU countries, rectify inefficiencies, eliminate double taxation, and mitigate fraud-related costs, thereby encouraging more cross-border investment in the EU.

This move comes at a critical time when the focus is on enhancing EU competitiveness. The trade group European Fund and Asset Management Association (Efama) this positive initiative, believing it would foster deeper integration of EU capital markets. Key aspects of the proposal include the issuance of common EU digital tax residence certificates by all member states, replacing the current burdensome paper-based procedures. According to Efama, investors will benefit also from streamlined fast-track procedures for withholding taxes on dividends. Additionally, national tax authorities will also gain additional due diligence, reporting, verification and tax audit mechanisms to combat fraud.

Once the proposal is formally adopted by the European Council, implementing acts, national legislations and administrative guidance will need to be prepared and adopted by 31 December 2028, with the regulations set to start applying in 2030.

António Frade Correia, senior tax advisor at Efama, commented on the decision, stating it was a welcome step to improve inefficient and burdensome tax procedures that disincentivised cross-border investing. He mentioned that this achievement followed several years of collaborative effort involving the European Commission, national tax authorities, industry representatives and the Spanish and Belgian Council presidency teams. Correia also emphasised the need for further collaboration between industry and policymakers to ensure effective national implementation of the proposal.

Correia highlighted the necessity of ensuring the proposal is effective in practice, noting that this would require ongoing collaboration between industry stakeholders and policymakers, as well as careful attention to national implementation details. He expressed hope that member states would implement the proposal in a way that avoids creating new obstacles when current systems are functioning well, while maintaining focus on the long-term objectives of enhanced transparency and efficiency.