Recital (3)

Considering those differences and also the principle of proportionality, the provisions of this Directive regarding national registers of certified financial intermediaries and obligations to report information should not be binding on Member States that have a comprehensive relief-at-source system in place and a market capitalisation ratio below a certain threshold, as defined in this Directive. The objective of promoting efficient and robust systems for the relief of excess withholding tax across the internal market should be considered to have been achieved where Member States that continue to apply their national relief-at-source system fulfil both those criteria as set out in this Directive. First, the market capitalisation criterion correlates with the size of the economy and the possible scale of dividend payments. Low market capitalisation implies low volumes of dividend distributions and therefore a lower risk of tax abuse. When a Member State reaches or exceeds the market capitalisation ratio threshold for a certain period of time, the common rules of this Directive should apply and should remain applicable, irrespective of whether at any time thereafter, its market capitalisation ratio falls below that threshold. Second, comprehensive relief-at-source systems that allow for the application of the appropriate tax rate at the time of payment in a straightforward and efficient manner should be considered to be equivalent to the relief-at-source system set out in this Directive. Those two criteria together can ensure that investors across the internal market have effective access to efficient withholding tax relief procedures in all Member States. For Member States which have a relatively small stock market and whose national relief-at-source system is sufficiently efficient, a requirement to change those systems would not be considered proportionate. Furthermore, as the common rules of this Directive would cover nearly the whole of the internal market, an appropriate level of convergence would be achieved.