“Withholding Tax Woes in Europe: How Investors are Losing Money”

Withholding tax in Europe: Investors are giving away their money

Study by Better Finance and DSW reveals glaring deficits

Düsseldorf/Brussels, May 17, 2023 – Only around 30 percent of investors in Europe who are invested in equities from another country actually try to recover their overpaid withholding tax on dividends. Of these 30 percent, less than half are successful (46 percent). More than 90 percent find the cross-border refund process difficult.

More than a fifth of investors have been waiting more than a year for a refund; 11.6 percent even more than two years. Of the whopping 70 percent of investors who don’t even try to recover their withholding tax, 58.6 percent say the process is too long and complicated for them; 16.7 percent name the high costs as a reason.

These are some of the results of the study “Withholding tax in the European Union: The hard struggle for private investors”, in the context of which the European investor association BETTER FINANCE and DSW surveyed around 3,000 private investors in 22 EU countries.

The European Capital Markets Union as a Fata Morgana

In fact, 83 percent of European investors face double taxation for not seeking a refund or for failing to pursue it. 31 percent of the investors surveyed no longer want to invest across borders in the future because the refund procedure is too complicated. “We are striving for closer integration within the European Union, also and especially on the capital market. Boundaries shouldn’t and shouldn’t matter to investors. Unfortunately, the practical implementation lags behind the noble claims and political postulates in many respects. A striking example of this grievance is the levying of withholding tax for investors,” says Jella Benner-Heinacher, General Manager of DSW (deputy).

Guillaume Prache, Managing Director of BETTER FINANCE, adds: “If we are really serious about the European Capital Markets Union, the EU must now – finally – act consistently. Only a simple and consistent process of withholding tax refunds on foreign dividends can and will boost cross-border investment. All administrative barriers must be removed and costs minimized.”

The complete study can be found here.