As outlined in ALFI’s response to the European Commission public consultation on the main barriers to the cross-borders distribution of investment funds across the EU in October 2016, at the time, ALFI supported the idea to limit withholding tax rates applicable to income received by investment funds from EU source countries to the standard rate of 15% which corresponds to the rate applicable by almost all double tax treaties signed by and between EU Member States and which could significantly reduce the number of applications for refunds or exemption from withholding taxes levied at source, thus reducing related costs.

ALFI observes that, since 2016, despite the actions undertaken at EU level, in particular the introduction of the Code of Conduct on Withholding Tax published by the European Commission in 2017, as well as at the level of the Organisation for Economic Co-operation and Development (OECD), the difficulties to access double tax treaties for investment funds or the difficulties of withholding taxes continues to be a barrier to cross-border investment as dealing with withholding taxes on income received by investment funds remains a delicate, and sometimes unsuccessful, exercise that triggers significant costs.

ALFI is strongly supportive of this initiative of the European Commission aiming at improving the current
situation and of the possible options outlined. In ALFI’s view, these options may be seen not as exclusive but as complementary in a time perspective, the first step consisting as suggested in improving withholding tax refund procedures. ALFI has indeed always been supportive of an EU harmonized approach that would provide clear access to double tax treaties for investment funds and of actions and rules that would remove the legal uncertainty surrounding the procedures for reclaiming excess withholding taxes paid and their outcome...

more at the ALFI letter.