.The Withholding tax, defined as tax on income imposed at source such as on dividends, interests and royalties, prevents situations of double non-taxation. The EU withholding tax is only levied on individuals (within EU) and not on companies, trusts, foundations, investment funds etc. Hungary and Malta are pure tax havens in EU when it comes to withholding tax exemption. For example, the EU withholding tax applies only to bank interest, bond interest, and analogous income, such as income from bond funds, money market funds, loans, and mortgages.

Table shows which Member States did not levy withholding tax

Withholding Tax (type)Member States that do not levy a withholding tax (2021)
RoyaltiesLatvia, Luxembourg, Hungary and Malta
InterestsGermany, Estonia, Cyprus, Latvia, Luxembourg, Hungary, Malta, Austria, Finland and Sweden
DividendsEstonia, Ireland, Cyprus, Hungary and Malta

Source: EPRS based on European Commission data, 2022.