Insurance Europe has revealed its response to a consultation conducted by the European Commission (EC) on withholding taxes and a new EU system to avoid double taxation.
The federation of European insurers and reinsurers welcomed the initiative, saying the current rules lead to lengthy, complex and costly withholding tax relief procedures. In some cases, investors end up waiving their right to claim a refund or relief from the withholding tax levied due to the complicated regulations, it said.
The consultation, which ran from April 1 to June 26, gathered the opinions of various stakeholders on loopholes in EU tax regulations and how to fix them. One of the EC’ aims is to avoid double taxation, which makes the EU market a less attractive investment destination.
“Insurance Europe takes the view that substance requirements should be harmonised, and that the Parent-Subsidiary Directive and the Interest and Royalties Directive should be clarified to ensure legal certainty regarding securities and intra-group payments,” the group said. “Taxpayers and tax authorities require legal certainty as to whether withholding tax benefits that a source state limits to its own resident taxpayers are extended to foreign taxpayers, to avoid discriminatory practices which are against the principle of free movement of capital.”