The Dutch Pension Federation has issued its support for the European Commission’s (EC) proposal to make withholding tax procedures faster and more efficient, and called for the establishment of an ‘EU Tax Register’ for this purpose.

In response to the EC’s consultation, the federation called for the tax register to be an interim solution in build up to a longer-term solution of providing tax exemption at source.

Taxes are withheld from dividends and interest in other EU countries, with the European Court of Justice previously ruling that pension funds are entitled to reclaim such taxes, which are levied at the source of income.

The Pension Federation described the procedures for the refund of withholding tax on cross-border payments as “lengthy, labour-intensive and expensive”, and added that there had been abuse of these procedures, such as the Cum/Ex scandal.

Therefore, the federation told the EC it prefers a solution that would provide tax exemption at source.

It stated that this could be done if national tax authorities exchanged information about organisations that are entitled to receive tax-free dividends and interest amounts, and if this information is also made available to issuers.

This exchange has got off to a “slow start”, according to the federation, which therefore called for an EU Tax Register as an interim solution.

“This can include 'registered pension funds' and other institutions, so that the tax authorities can refund withholding taxes much more quickly and easily if they are called upon,” the federation said.

The EC is expected to submit a proposal for a European directive on withholding tax procedures in the fourth quarter of 2022.

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