The European Fund and Asset Management Association (EFAMA) has called for regulated investment funds to receive the withholding tax relief at source proposed for pension institutions, in its response to the European Commission’s Tax Omnibus consultation. The proposed entitlement covers dividends received from other EU countries. Extending it to funds would address differences in tax treatment between investment vehicles and double taxation affecting household investors. Regulated funds typically face withholding tax of 15%–30% and must pursue refunds that can take months or years, sometimes without success.
The requested extension would include undertakings for collective investment in transferable securities (UCITS) and European long-term investment funds, with relief applying from 2037 alongside pension institutions. Member states should retain the option to implement relief earlier. The definition of pension institutions should cover comparable schemes across all member states, including those in Denmark and Spain otherwise excluded, and accommodate pensions investing through pooled funds. Changes to the FASTER Directive, which applies from 2030, should remove the option to exclude dividends above EUR 100,000 from relief at source and quick refunds. At minimum, exemptions from that restriction should work across member states for UCITS, alternative investment funds (AIFs) and pension schemes.
Under the anti-avoidance rules, AIFs should retain their classification as financial undertakings, while UCITS and regulated AIFs should be excluded from controlled foreign company rules. The exemption for groups within Pillar Two and the proposed exclusion for low-risk third-party loans should also be retained to avoid duplicating compliance burdens.