Recital (10)

To fulfil the objective of more efficient relief of excess withholding tax, common procedures should be implemented across the Union which allow clear and secure information on the identity of the investor to be obtained quickly, especially in the case of large investor bases, that is, in relation to investment in publicly traded securities, where identifying individual investors is challenging. Such procedures should also allow for the application of the appropriate tax rate at the time of payment (relief at source) or for a quick refund of any excess amount of tax paid. Given that cross-border investments usually involve a payment chain of financial intermediaries, relevant procedures should also allow for the tracing and identification of the chain of intermediaries and, consequently, of the income flow from the issuer of the security to the registered owner and information about the underlying investor. The most common types of investment arrangements usually involve a custodian bank or another investment entity, such as a broker, which holds the securities in its name on behalf of the underlying investor. In such arrangements, it is the underlying investor that would be considered to be the registered owner of the securities. Member States that apply withholding tax on income from securities and provide relief for excess withholding tax and do not have a comprehensive relief-at-source system in place, or that have a market capitalisation ratio equal to or above the threshold set out in this Directive, should therefore establish and maintain a national register of those financial intermediaries that have a significant role in the payment chain. Once registered, such financial intermediaries should be required to report information available to them about the dividend or interest payments, if applicable, that they handle. The information required should be limited to information that is crucial to reconstruct the payment chain and therefore useful to prevent the risk of tax fraud or tax abuse, to the extent that such information is available to the reporting intermediary. Member States that apply withholding tax on interest at varying rates and need to engage in similar relief procedures, or that have in place a comprehensive relief-at-source system for dividend payments and have a market capitalisation ratio below the threshold set out in this Directive, could also consider using the established national register, as the case may be.