Insurance Europe welcomes the initiative by the European Commission to introduce a common, more efficient, EU-wide system for withholding tax relief, the insurers' federation mentions in its response to a consultation conducted by the EC on withholding taxes and a new EU system to avoid double taxation.

The widely divergent rules lead to lengthy, complex and costly withholding tax relief procedures. In some cases, investors end up waiving their right to claim a refund or relief from the withholding tax levied.

Insurance Europe takes the view that substance requirements should be harmonized, and that the Parent-Subsidiary Directive and the Interest and Royalties Directive should be clarified to ensure legal certainty regarding securities and intra-group payments.

Taxpayers and tax authorities require legal certainty as to whether withholding tax benefits that a source state limits to its own resident taxpayers are extended to foreign taxpayers, to avoid discriminatory practices which are against the principle of free movement of capital.

[s|insurance]