The European Parliament voted on 10 March 2022 to adopt two reports containing recommendations on withholding tax reform and simplifying tax systems in the EU.

Members welcomed the Commission’s intention to present, by the end of 2022, a proposal establishing a common and standardized system for withholding taxes, accompanied by a mechanism for the exchange of information and cooperation among tax administrations of Member States. They urged the Commission, with full respect for EU competences, to strive also to tackle divergences in withholding taxes in the EU.

The Commission is called on to:

• come forward with a common and standardised EU procedure for withholding tax refunds for all Member States;
• introduce as part of this harmonization, rules on exemptions and deductions and a standardized format and process for reclaim requests, and to address the current lack of a uniform definition of ‘beneficial owner’, the lack of alignment of time periods for request and reclaim, and language barriers;
• take account of existing digital solutions in Member States, to assess how to leverage blockchain technologies to prevent tax evasion and avoidance, while fully respecting EU data protection rules, and to consider the establishment of a pilot project.

Members welcomed the Commission’s proposed option to establish a fully fledged common EU relief-at-source system, which could be a reliable solution in the long term.

European withholding tax framework

Fair and simpler taxation

Committee report

Summary