FASTER Directive on withholding tax relief: transposition

When a company pays a dividend to an investor in another country, the source country deducts tax at payment at its domestic rate, which can be higher than the rate the investor's tax treaty allows. The investor then claims back the excess under national refund procedures that differ by country (EUR-Lex summary (external site)).

The FASTER Directive (Faster and Safer Relief of Excess Withholding Taxes), Council Directive (EU) 2025/50, sets common EU procedures for that relief on dividends and, where applicable, interest (Council Directive (EU) 2025/50 (external site)).

Today each Member State has its own forms and proofs of residence for relief of withholding tax. The directive introduces a common digital tax residence certificate, issued by the investor's Member State of residence and accepted across the EU (EUR-Lex summary (external site)).

It adds two fast-track procedures. With relief at source, the reduced treaty rate is applied when the income is paid; with the quick refund, the excess is refunded within a set period after payment (Council Directive (EU) 2025/50 (external site)).

Both procedures run through certified financial intermediaries, banks and other intermediaries entered in a national register. These intermediaries report standard information on each payment and on the chain of intermediaries to the tax authority of the source country (EUR-Lex summary (external site)).

As an example only: on a dividend of EUR 1,000 with 30 percent withheld and a treaty rate of 15 percent, the excess is EUR 150. Under FASTER, that EUR 150 is either never withheld or refunded through the quick procedure (Council Directive (EU) 2025/50 (external site)).

The duties fall on financial intermediaries in the payment chain of securities income, such as custodians, banks and investment firms (Council Directive (EU) 2025/50 (external site)). The roles most directly concerned:

• Tax Associate: relief claims, residence certificates and reports to source tax authorities follow one EU procedure.
• Corporate Actions Analyst: dividend and interest events carry the reduced rate or the quick refund request.
• Custody Operations Analyst: the custody chain is reported intermediary by intermediary to the source country.
• Reference & Security Master Data Analyst: investor residence and security data feed the standard reports.
• Investment Operations Analyst: fund and portfolio income reflects relief at source or a faster refund.

The Council adopted the directive on 10 December 2024 (Council Directive (EU) 2025/50 (external site)).

Member States adopt and publish their national rules by 31 December 2028 and apply them from 1 January 2030. Both dates are confirmed in Article 25 (Council Directive (EU) 2025/50 (external site)).

The Commission proposed the directive in 2023. The proposal addressed two linked problems: slow and costly refund procedures for cross-border investors, and the risk of abusive refund claims (European Commission (external site)).

The directive harmonises the procedures for relief. The withholding tax rates themselves remain set by national law and tax treaties (EUR-Lex summary (external site)).