Recital (21)

The application of the withholding tax relief procedures under this Directive is subject to the condition that the registered owner, which is either a natural person or an entity and is eligible to receive the dividend or interest as the holder of the securities, is also the person that is entitled to relief of withholding tax in accordance with the national rules of the source Member State or a double tax treaty, as applicable. Where the registered owner is also entitled to the relief, only the provisions for direct investments should apply. However, in situations where the registered owner and the person entitled to relief are not the same, the provisions for indirect investments should apply. The provisions for indirect investment provide relief in cases where certain collective investment undertakings (CIU), or the investors therein, could be entitled to relief but are not the registered owner because the securities are held by a different legal person or by a fiscally transparent CIU. The provisions for indirect investments ensure that legitimate investors have access to the procedures under this Directive. Therefore, in the interpretation of the concept of CIU, Member States should include CIUs which are entitled to relief of excess withholding tax on their own behalf as well as CIUs where the investors holding equity in a CIU are entitled to relief, based on the national rules of the source Member State or on a double tax treaty. When involved in indirect investments, the certified financial intermediary should still be under an obligation to fulfil the due diligence requirements. Furthermore, it should be possible for the certified financial intermediary to be held liable if there is any loss of tax revenue.