The Transitory Provisions of The Withholding Tax
The Countries that would be applying the transitory provisions, instead of exchanging information will retain withholding tax as follows:
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- 15% in the first three years (2005-07-01 – 2008-06-30),
- 20% in the next three years (2008-07-01 – 2011-06-30), and
- 35% after 2011-07-01.
With regard to the distribution of their withholding tax, the Directive provides that all Countries that are withholding it will retain 25% of all receipts at their end and will transfer the remaining 75% to the Member State where the beneficiary owner is resident.
With regard to double taxation, the Directive provides that the Member State where the beneficiary owner is resident, and therefore where he normally pays his tax dues, should ensure that tax is not paid more than once when applying the withholding tax rates.
Read more about this topic: European Union Withholding Tax
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