Banks as Fiscal Gatekeepers in the European Union: Legal Duties, Fundamental Rights, and Comparative Accountability in Withholding Tax Enforcement under EU Law – Insights from Germany, the Netherlands, France, Italy, and the United Kingdom

Abstract

This article examines the paradigm shift inaugurated by Directive (EU) 2025/50, which transforms the European Union’s approach to withholding tax (WHT) relief by entrusting Certified Financial Intermediaries (CFIs)—primarily banks— with delegated enforcement powers. Moving beyond prior soft-law initiatives and national refund systems, the Directive creates a harmonised framework centred on real-time reporting, digital tax residency certification (eTRC), and relief-at-source mechanisms. In doing so, it repositions private financial actors as quasi-public enforcers within the Union’s fiscal architecture. The analysis traces the origins of this reform in the context of the Capital Markets Union (CMU), cum-ex scandals, and technological integration, assessing the Directive’s implications for legal certainty, fundamental rights, and cross-border investment.Through a doctrinal and functional lens, the article explores whether this model reconciles fiscal efficiency with procedural fairness, particularly in light of the Charter of Fundamental Rights, GDPR, and EU primary law. It interrogates the normative tensions of delegating treaty-based legal interpretation—such as “beneficial ownership” and “anti-abuse”—to private actors lacking adjudicative authority or uniform guidance. Comparative insights from Germany, the Netherlands, France, Italy, and the UK further highlight the limits of regulatory convergence and constitutional accountability. The article concludes with a set of policy proposals: the creation of an EU-level CFI Supervisory and Appeals Authority; the adoption of minimum procedural safeguards via delegated regulation; harmonised interpretative guidance on tax treaty concepts; proportionate liability protections for CFIs; and a Union-wide taxpayer portal. Framed as a constitutional moment in EU tax governance, 2025 is identified as a turning point where the balance between public and private enforcement, digital innovation and legal legitimacy, becomes the central axis of a new European fiscal constitution.