Norway: Treaty eligibility of U.S. Regulated Investment Companies
Clearstream Banking1 would like to inform customers that the Norwegian Tax Authorities (NTA) recently extended the benefit of the Double Taxation Treaty (DTT) between Norway and the U.S.A. to U.S. Regulated Investment Companies (RICs).
The NTA recently opened the withholding tax reclaim procedures to U.S. RICs.
Based on the reviewed commentary of the OECD model tax convention, the NTA recently recognised DTT eligibility to U.S. RICs.
In order to be eligible to reclaim the tax withheld on Norwegian dividends, a U.S. RIC will have to qualify as “beneficial owner” in the meaning of Article 8 of the DTT between Norway and U.S. under the following conditions:
- The U.S. RIC must have a discretionary power to use and enjoy the dividend received from Norwegian companies;
- The discretionary power must be unconstrained by a legal, contractual or factual obligation to pass on the dividends to its investors.
- These two conditions are usually met by U.S. RICs. However, the NTA will assess the tax reclaims on a case by case basis.
Impact on customers
Entities qualifying as U.S. RICs and subject to Norwegian dividend withholding tax are entitled to file a refund claim.
No specific documentation requirements are requested for U.S. RICS. The standard documentation requirements remain as per current process, when submitting standard reclaim applications via Clearstream. Please refer to our Market Taxation Guide - Norway for the required documents.
Customers are however reminded that the NTA will assess each tax reclaim request received individually and may at any time request such additional supporting documentation, which they deem necessary to determine the beneficial owner’s eligibility for a reclaim of the requested amount.
The statutory deadline for reclaiming withholding tax is extended to five years, after the end of the calendar year in which the dividend was paid, effective 1 January 2017. The deadline by which Clearstream Banking must receive the documentation for a standard refund application is, at the latest, two months before the statutory deadline.
Furthermore, a U.S. RIC fulfilling the above-mentioned conditions that previously received a rejection of its tax reclaim has the right to make an appeal against this rejection. In such cases, the appeal will be considered even if the appeal deadline is exceeded. The claim will need to include the letter of rejection from the tax authorities as well as documentation requested by the tax authorities. Clearstream Banking does not offer any service in this respect. Documents must be sent directly to the tax authorities.
For further information, please contact the Clearstream Banking Tax Help Desk, Clearstream Banking Client Services or your Relationship Officer.
1. Clearstream Banking refers collectively to Clearstream Banking S.A., registered office at 42, avenue John F. Kennedy, L-1855 Luxembourg, and registered with the Luxembourg Trade and Companies Register under number B-9248, and Clearstream Banking AG (for CBF customers using CreationOnline), registered office at 61, Mergenthalerallee, 65760 Eschborn, Germany and registered in Register B of the Amtsgericht Frankfurt am Main, Germany under number HRB 7500.