On Tuesday, the EU finance ministers agreed to new tax rules. These will ensure that investors no longer have to pay double taxation on the returns from their cross-border investments in shares and bonds.
The idea is that this will lower the threshold for cross-border investments. According to the European Commission, which developed the proposal, the rules also help combat tax fraud.
Currently, many member states levy tax on dividends from shares and interest on bonds for cross-border investments. Investors must then pay tax in the country where they invest and income tax on the same income in the country where they live.
Too complicated
Although treaties between member states aim to solve the problem of double taxation, this does not seem to work well in practice. The rules also differ between member states. Procedures for tax reduction or recovery of overpaid tax are complicated, expensive, and time-consuming.
The new rules should put an end to that.
Member States must transpose the directive into national law by 31 December 2028, and the national rules must enter into force on 1 January 2030.