Europe Approves Reduction of Fiscal Procedures Between Countries with the Faster Directive
On June 19, 2023, the European Commission approved a Council Directive proposal to reduce bureaucracy in tax procedures for transactions between member countries. The Faster Directive aims at three main improvements.
Improvements in the Reduction of Fiscal Procedures in the EU Proposed by the Faster Directive
1. Digital Tax Residence Certificate
Although it may seem insignificant, this EU-issued document will make procedures for reducing tax withholding faster and more efficient. Therefore, in cases where transactions between countries may potentially be subject to withholding, this certificate can help avoid such withholdings easily and securely.
2. More Streamlined Procedures
In cases where the withholdings suffered are higher than the tax that should have been paid, when the taxpayer requests a refund of the excess tax paid, the procedure will be much simpler and more streamlined.
3. Standardized Information Communication System
Certain financial intermediaries will be required to communicate information in a standardized manner to tax administrations to confirm whether reduced withholding rates are potentially applicable, allowing administrations greater control over fraudulent cases.
Although the regulations may change, the implementation to reduce fiscal procedures for transactions between EU countries will take place between 2028 and 2030. At UHY Fay & Co, a firm with over 40 years of experience in professional services, we keep you informed about all tax obligations. We recommend staying tuned to our news updates.
