Belgium: New procedure to obtain tax exemption on dividend payments

02.08.2017

Effective

1 September 2017

Clearstream Banking1’s  depository in Belgium, BNP Paribas (BNP), will stop offering the relief at source procedure for tax exemption on Belgian dividends. The exemption will be granted via the quick refund procedure according to the below amended process.

Note: This new process does not apply to residents of countries that have a DTT with Belgium. The current quick refund procedure continues to apply.

Impact on customers

Beneficial owners being:

  • Supranational/international organisations;
  • Non-resident pension funds; or
  • Foreign companies holding “qualifying” participation

who wish to obtain a tax exemption on dividends paid from 1 September 2017 will have the possibility to apply for two types of quick refund process. 

The “anticipated” quick refund

Under this process, customers are required to provide their tax certification in advance.

This is the process recommended by BNP to ensure a smooth and quick repayment of the tax withheld, approximately within four weeks.

1. For beneficial owners being supranational/international organisations, non-resident pension funds and foreign companies holding “qualifying” participation and claiming full tax exemption.

Tax documentation

The following documents must be provided to Clearstream at the beginning of the year or at the latest seven (7) business days before record date of the first dividend payment to which it applies

  • Annexe 229 (valid until revoked), for supranational or international organisations; or
  • Annexe 26 (valid until revoked) for non-resident pension funds; or
  • Self-declaration for exemption of dividend withholding tax (valid for one calendar year) for foreign companies holding “qualifying” participation.

and

  • Power of Attorney from the final beneficial owner (if certification signed by a third party).

and

  • Power of Attorney from the Clearstream Banking customer (upon request).

and

  • Per payment tax instruction provided via MT599 message at the latest seven (7) business days before record date of the first dividend payment to which it applies, by 10:00 CET. It must contain the following information:
    ATTN: PTR TAX
    RE: BELGIUM QUICK REFUND
    ISIN:
    PAY DATE:
    CBL ACCOUNT:
    BENEFICIAL OWNER STATUS: *
    BENEFICIAL OWNER NAME:
    BENEFICIAL OWNER FISCAL ADDRESS:
    BENEFICIAL OWNER FISCAL COUNTRY:
    SHARES:
    TAX RATE:

    *Supranational/international organisations, non-resident pension funds or foreign companies holding “qualifying” participation.

Documents that are considered as valid until revoked or are required annually do not need to be renewed (unless they expire before the next payment date to which they should apply) and will be taken into consideration for the anticipated quick refund upon receipt of the valid per payment tax instruction.

2. For beneficial owners being foreign companies holding “qualifying” participation and claiming the benefit of the reduced withholding rate of 1.6995%.

Tax documentation

The following documents must be provided to Clearstream per payment and at the latest seven (7) business days before record date of the first dividend payment to which it applies.

  • Self-declaration for reduced dividend withholding tax rate of 1.6995% (valid per payment);

and

  • Power of Attorney from the final beneficial owner (if self-declaration signed by a third party);

and

  • Power of Attorney from the Clearstream Banking customer (upon request);

and

  • Per payment tax instruction provided via MT599 message at the latest 7 business days before record date of the first dividend payment to which it applies, by 10:00 CET. It must contain the following information:
    ATTN: PTR TAX
    RE: BELGIUM QUICK REFUND
    ISIN:
    PAY DATE:
    CBL ACCOUNT:
    BENEFICIAL OWNER STATUS: *
    BENEFICIAL OWNER NAME:
    BENEFICIAL OWNER FISCAL ADDRESS:
    BENEFICIAL OWNER FISCAL COUNTRY:
    SHARES:
    TAX RATE:

    *Supranational/international organisations, non-resident pension funds or foreign companies holding “qualifying” participation.

Based on the documentation received before payment date and provided that it is valid, BNP will apply to the paying agent as soon as possible for a reclaim of tax. The tax will be refunded once the funds have been received from the paying agent, which in some cases may occur on payment date.

The dividend will be paid, on payment date, net of the Belgian default tax rate and a tax adjustment will be credited upon receipt of the amount.

The “post-payment” quick refund

Under this process, customers who missed the “anticipated” quick reclaim deadline will have the possibility to provide their documentation and corporate action instruction until payment date, by 10:00 CET at the latest.

The dividends will be paid on payment date net of the Belgian default tax rate and the tax amount will be refunded once the funds have been received from the paying agent, that is within approximately four weeks after the reclaim to the paying agent.

Many paying agents want to receive the final beneficiary documentation within very short deadlines. We recommend that our customers avoid using this procedure as the risk of rejection by the paying agent is high.

Further information

Customers who missed the quick reclaim deadlines can apply for a standard reclaim. Please refer to the Market Taxation Guide - Belgium for further details.

For further information, please contact the Clearstream Banking Tax Help Desk, Clearstream Banking Client Services or your Relationship Officer.
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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 Clearstream Banking AG customers using Creation Accounts), registered office at 61, Mergenthalerallee, 65760 Eschborn, Germany and registered in Register B of the Amtsgericht Frankfurt am Main, Germany under number HRB 7500.