EU Tax Reforms: Withholding Tax Moves Forward, Estonian Veto Stalls VAT Update
European Union finance ministers reached a preliminary agreement on a law to expedite cross-border withholding tax refund procedures but failed to update value-added tax (VAT) rules due to Estonia’s objection.
The new law will streamline tax refund systems for cross-border dividend and interest payments across the EU. Czechia initially opposed the law due to potential changes to its system but withdrew its objections.
Countries with smaller capital markets (less than 1.5% of the total EU market) can opt out if they already have efficient systems.
Belgian Finance Minister Vincent Van Peteghem noted that the European Parliament must review the law again due to significant amendments, delaying its final adoption.
Estonia blocked the VAT update, particularly opposing the deemed supplier status for online platforms like Airbnb and Uber, arguing it would increase costs for consumers and disadvantage small businesses not currently charging VAT. The VAT package, which includes digital reporting and e-invoicing, needs further discussion.
