The Internal Markets Commissioner, Mr McCreevy and the Taxation Commissioner Mr Kovacs joined forces this week to announce that the EU would pursue methods for improving cross border tax refund processes, mainly arising from the application of withholding taxes on dividend and interest income. As with all EU recommendations, it will take time for these to find their way into law in the individual Member States. Because the recommendations relate to direct tax measures, the Commission's statement is more in the form of encouragement rather than anything else.

Following a programme of research and consultation, the Commission's recommendations are as follows:

• Encourage Member States to apply at source rather than by refund any withholding tax relief applicable to securities income under double taxation treaties or domestic law.
• Encourage Member States to apply quick and standardised refund procedures where they cannot provide relief at source, for example because the investor has not provided all necessary informa tion, and lists possible elements of such refund procedures.
• Member States to accept alternative proofs of investors’ entitlement to tax relief besides certificates of residence.
• Suggest how Member States can involve financial intermediaries in making claims on behalf of investors and, in particular, how the procedures could operate where there is a chain of financial intermediaries, in different Member States, between the issuer of the securities and a beneficiary.
• Encourage greater acceptance by Member States of electronic rather than paper information.
• Member States could apply a risk-based approach to setting requirements of proof of entitlement to tax reliefs.
• Member States could set up single or joint audits or even external audits to investigate the compliance of financial intermediaries with obligations created in line with the recommendation.
• Follow-up discussions with Member States on the implementation of the Recommendation.
• Greater use of existing channels for exchange of information between Member States and the exploration of new channels.

Some of these recommendations are either already in place or partly in train in Ireland and the UK; perhaps less so in other Member States.