EU directive to claw back excess exemptions on foreign dividends would save taxpayers €5.17 billion a year

europa inversion

Banca March | Last July, the European Commission published the proposal for the so-called Faster directive, to achieve more efficient taxation of European capital market returns. At the Congress of the Association of Tax Inspectors held late last week, the Spanish Ministry of Finance shared its progress towards a regulation that would free investors from tedious processes to recover excess withholding taxes. The Treasury hopes that Ecofin will be able to approve this measure before the end of the Spanish presidency of the Council, with the directive to be implemented on 1 January 2027, according to the date set by the EU.

When a Spanish investor receives a dividend from a foreign company, he or she may be subject to a withholding tax in the country of origin that is higher than that established by Spanish taxation. If a double taxation agreement exists, up to 15% of the excess withholding tax can be recovered. This procedure has both direct (monetary) and indirect (time) costs associated with it. According to European Commission estimates, the standardisation of procedures could save taxpayers around €5.17 billion per year.

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