Recital (2)

In order to strengthen Member States’ ability to prevent and fight tax fraud and tax abuse, which is currently hampered by a general lack of reliable and timely information on investors, it is necessary to provide the possibility of a common framework for the relief of excess withholding taxes on cross-border investments in securities that is resilient to the risk of tax fraud and tax abuse. That framework would lead to convergence among the various relief procedures applied in the Member States while ensuring transparency and certainty with regard to the identity of investors for securities issuers, withholding tax agents, financial intermediaries and Member States, as the case may be. To that effect, the framework should rely on automated procedures, such as the digitalisation of the tax residence certificate in terms of both procedure and form. The framework should also be flexible enough to duly take into account the various systems applicable in different Member States while providing appropriate anti-abuse tools to mitigate the risk of tax fraud, tax evasion and tax avoidance. In that regard, it is necessary to take into consideration the different approaches of tax authorities, depending on the relief system in place. Under the relief-at-source system, tax authorities are only able to obtain relevant information on the investors and the payment chain after relief is applied. By contrast, where a refund system is applied, it is crucial for the tax authorities to obtain adequate information before relief is applied in order to assess whether relief should be granted. In both relief systems, rules on the liability of the financial intermediary are established in case of undue relief. This Directive does not restrict a Member State’s ability to regulate the means by which certified financial intermediaries recoup any outlay incurred while adapting to, or complying with, the obligations laid down by this Directive.