What is missing in the regulation to make it highly efficient in recovering the due amount?
Laetitia Carroz. – “From the perspective of the Luxembourg banking sector, the Faster directive is seen as a welcome development for investors and clients, as it aims to simplify and secure withholding tax procedures applicable to cross-border investments. The introduction of the digital tax residence certificate (hereafter “eTRC”) is particularly welcomed.
For an open and internationally orientated financial centre such as Luxembourg, the introduction of more efficient withholding tax procedures on cross-border securities income yielding genuine simplifications both for investors and paying agents is key.
In this context, the ABBL has long advocated for greater harmonisation at the European level, considering that a more convergent framework would strengthen investor confidence, facilitate the free movement of capital and contribute to a more integrated, competitive and client-friendly European capital market.
That said, the Luxembourg banking sector, and the ABBL in particular, stresses that the directive contains a certain number of carve-outs and options that might lead to potential fragmentation in its implementation and reduce its effectiveness. It is worth noting that Certified Financial Intermediaries (“CFIs”) will need to handle several processes, relief at source and the refund system under Faster, as well as national processes which, with regard to the condition of the market capitalisation ratio, would not adhere to the Faster processes. It is of interest to the CMU to transpose the provisions of the directive into national legislation for as many member states as possible in order to avoid multiple processes.
In addition, the ABBL calls for more proportionality and simplification as regards the obligations vesting to financial intermediaries under Faster so that the directive truly achieves its objectives of efficiency, harmonisation, and speed without creating a new layer of administrative and operational complexity.
Similarly, for the same reasons, the ABBL advocates also for a single reporting under Faster to local authorities (as for CRS) or to a centralised European platform, which could send the information to the competent authority of the source Member States.
Finally, some clarifications are expected via European Commission guidelines and implementing acts, in particular regarding the allocation of liabilities, penalties and the consequences attached to the presence of a non-CFI in the payment chain.
With multi-layered payment chains, how will liability be allocated when an upstream or downstream intermediary fails to comply with CFI obligations, leading to misapplied tax rates or denied refunds?
“While the Faster directive introduces the principle that the CFI acts as the primary point of accountability vis-à-vis tax authorities, the practical allocation of liability is complex, and multi-layered payment chains remain insufficiently detailed at this stage.
In highly intermediated custody and payment chains, this model raises important operational and legal questions, in particular where the root cause of an error or omission lies with an entity that is not itself a registered CFI or is located outside the EU framework.
Further guidance from the European Commission and national tax authorities will therefore be essential to clarify this.
How will clients having an account with non-CFI be refunded?
“We understand that clients holding their accounts with a non-CFI will not benefit directly from the Faster relief at source and quick refund procedures unless another intermediary in the custody chain is a registered CFI and formally assumes responsibility under a subrogation arrangement, as foreseen by the Faster directive.
In the absence of a registered CFI acting on their behalf, clients will have to rely on the traditional refund procedures. These processes are generally slower, more administrative in nature, and subject to local requirements and timelines, which may vary from one country to another.”
This article was written for the Wealth management & Private banking supplement of Paperjam magazine’s March 2026 issue, published on 25 February. It is published on the site to contribute to the full Paperjam archive. Click this link to subscribe to the magazine.
