FASTER (Faster and Safer Relief of Excess Withholding Taxes)

Overview

The European FASTER directive (Faster and Safer Relief of Excess Withholding Taxes) aims to harmonise, within the EU, withholding tax procedures applicable to dividends and interest from listed European securities paid to non-residents, in order to make them more efficient for all stakeholders while combating tax fraud and abuse.

This directive notably seeks to modernise and secure the tax regime applicable to investment income in a context of increasing cross‑border investments. It pursues several objectives:

• Facilitating these investments,
• Making withholding tax procedures more efficient,
• Improving tax transparency,
• Combating abuse.

It is now these last two aspects – transparency and the prevention of fraud – that have become the priority for the Member States.

 

Main provisions

The FASTER directive consists of four main components:

1. A common digital tax residence certificate

   The first pillar of FASTER is the creation of a harmonised electronic tax residence certificate (eTRC) at European level, which is intended to replace the current patchwork of national paper certificates.

   Investors holding diversified portfolios in several EU countries will be able to use a single eTRC to request different withholding tax refunds during the same year.

   Member States will have to implement automated procedures enabling this certificate to be issued within 14 business days.
    

2. Central role for certified financial intermediaries

   CFIs become a key player in the framework:

   • Verifying investor eligibility,
   • Collecting and checking tax documentation,
   • Requesting withholding tax relief or refunds on behalf of investors,
   • Bearing increased responsibility in the event of errors or breaches.

    

3. Fast-track procedures

   FASTER complements the traditional refund process with two harmonised mechanisms:

   • Relief at source, which directly applies the treaty rate when the dividend or interest is paid,
   • Quick refund, which allows the recovery of excess withholding tax within a maximum period of four months.

    

4. Standardised reporting

   CFIs will be required to report information relating to income payments (within two months of each payment), so that tax authorities can reconstruct the full transaction and payment chain and thereby detect abuses.

   Two reporting flows to national tax authorities are possible, depending on the option chosen by the Member State where the income arises:

   • Direct reporting: each CFI in the custody chain reports to the tax authority of the issuer’s country, which is responsible for reconciliation;
   • Indirect reporting: each CFI in the custody chain reports to the next CFI in the chain. The paying agent (last link in the chain) submits to the issuer’s tax authority a report that consolidates and reconciles the data from the custody chain.

 

Challenges and Opportunities

The operational implementation of FASTER has yet to be clarified. The following are still awaited:

1. Implementing acts (format of the eTRC, reporting and quick refund procedure schemas, registration portal for CFIs),
2. The Commission’s guidance, which each Member State may or may not choose to follow,
3. The choices to be made by Member States regarding the many options left to them by the Directive, the number of these options creating a risk of procedural fragmentation that runs counter to the Directive’s original objective.

The reporting scheme is expected in Autumn 2026, with the other work continuing at the end of 2026 and the beginning of 2027.