The FASTER Directive sets out that EU Member States whose market capitalisation exceeds 1.5% of the total EU market capitalisation for four consecutive years will be subject to specific requirements related to withholding tax relief. Additionally, from 2026 ESMA will have to publish the relevant annual figures related to this provision. To support this objective, ESMA is introducing a transparent, consistent and robust framework to determine market capitalisation ratios across EU Member States. ESMA’s metrics will be crucial for determining which EU Member States must comply fully with the requirements set out in the FASTER Directive.

The proposed methodology is aligned with existing transparency frameworks and uses transaction data reported under the Regulation on markets in financial instruments (MiFIR). It details the approach to computing share prices, calculating market capitalisation at instrument and company levels, and aggregating these figures to determine each Member State’s market capitalisation ratio. 

The finalised methodology will enable accurate identification of jurisdictions subject to the FASTER Directive’s obligations, supporting enhanced tax compliance and reducing fraud risks. Ultimately, it will foster greater trust and efficiency in the EU’s capital markets and tax systems, benefiting investors.

ESMA will consider the feedback received to the consultation by  and expects to publish a Final Report and submit the draft regulatory technical standards to the European Commission for adoption in October 2025.

Further information:

Senior Communications Officer
[email protected]