Belgium NBB: Tax impact on account structure and service offering
22 October 2018
Clearstream Banking S.A.1 (CBL) will deposit and settle Belgium securities integrated into the X/N system of the National Bank of Belgium (NBB) that are T2S eligible with Clearstream Banking AG 2 (CBF) in order to enable future OneClearstream service upgrades (the “Migration Date”). This is part of our ongoing efforts to harmonise our services allowing customers to benefit from advantages across multiple areas of our business.
As indicated in Announcement C18034, CBF will operate an X account (exempt account) in NBB’s X/N system such that, from a fiscal point of view, all customers that hold NBB-eligible securities through CBF must do so exclusively on behalf of beneficial owners (including themselves, if applicable) that qualify for exemption from Belgian withholding tax.
The current process for CBL customers remains unchanged.
The standard rate of withholding tax is 0% and no relief or reclaim procedure is applicable.
All Clearstream Banking3 customers must hold NBB-eligible securities exclusively on behalf of the following categories of beneficial owners (including themselves, if applicable) that qualify for exemption from Belgian withholding tax:
- Tax payers subject to Belgian corporation tax;
- Institutions, associations or corporations pertaining to the supervision of insurance companies;
- Semi-public institutions for social security and similar institutions;
- Investors not resident in Belgium;
- Certain unit trusts;
- Non-resident corporations that do business in Belgium and have allocated the income generating capital to their business activities in Belgium (for example, foreign branches operating in Belgium);
- The Belgian State;
- Undertakings for collective investment established under foreign laws, whose assets are held on a joint basis and whose units are neither offered for public subscription nor traded in Belgium;
- Resident companies whose activities consist exclusively or primarily in the granting of credit and loans;
- The Belgian Regions and Communities.
These categories represent the interpretation of the statutory descriptions of exempt entities listed in the One-Time Certificate for Belgian Debt Securities integrated into the X/N System of the National Bank of Belgium (“OTC NBB”). Clearstream Banking takes no responsibility in the event of any different interpretation or extension of Article 4 of the Royal Decree of 26 May 1994 to other categories of investors.
- For an eligible beneficial owner (that may include the customer, if applicable) to obtain entitlement to hold NBB-eligible debt securities in Clearstream Banking’s X account, the customer must submit, before the first trade, an OTC NBB certifying that the securities are exclusively owned by such exempt beneficial owner.
- Upon receipt of validation confirmation from Clearstream Banking of the OTC NBB, settlement will be allowed and automatic exemption at source is applied on the entire customer entitlement for all interest payments on the impacted accounts. No further action is required from customers in order to receive gross payments. In these circumstances, relief at source and reclaim of withholding tax do not apply to interest from NBB-eligible debt securities.
- Beneficial owners that are Belgian residents are responsible, through their annual declaration, to comply with all legal and regulatory requirements imposed by Belgian law in respect of withholding tax.
- Furthermore, customers that are residents of Belgium must complete the “Identification Certificate X/N Securities Settlement System (movable assets) Exempt Account” (available on the NBB website) and provide it to the Belgian Tax Authorities upon request. Clearstream Banking does not need to receive a copy of this certificate.
- Customers and/or beneficial owners are responsible for ensuring compliance with these obligations. Clearstream Banking has no direct liability towards the Belgian Tax Authorities in this respect
Starting immediately, CBF customers are able to submit an OTC NBB for their CSD 7-digit accounts in order to ensure that settlement of these securities is allowed as of Migration Date.
Any OTC NBB submitted by CBF customers before Migration Date for their 6-series accounts remain valid only for these accounts and cannot be duplicated for the CSD 7-digit accounts of the same customer.
One OTC NBB may cover several main and sub-accounts, however every sub-account must be clearly and correctly defined in the certificate. The certification of the main account does not automatically cover all of its subaccounts.
Customers having both CBL accounts (5-digits including 6-series) and CBF accounts (7-digits) must provide 2 different OTCs NBB to separate their accounts per legal entity. An OTC NBB with both CBL and CBF accounts will be rejected.
No further action is required for CBL customers that have already submitted OTC NBB for their CBL accounts.
The OTC NBB template is available on the Clearstream website, Tax Forms to use - Belgium.
For further information, please contact the Clearstream Banking Tax Help Desk or Clearstream Banking Client Services or your Relationship Officer.
1. Clearstream Banking S.A. (CBL) registered office at 42, avenue John F. Kennedy, L-1855 Luxembourg, and registered with the Luxembourg Trade and Companies Register under number B-9248.
2. Clearstream Banking AG (CBF), registered office at Mergenthalerallee 61, 65760 Eschborn, Germany, registered with the Commercial Register of the District Court in Frankfurt am Main, Germany, under number HRB 7500.
3. 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, registered office at 61, Mergenthalerallee, 65760 Eschborn, Germany and registered in Register B of the Amtsgericht Frankfurt am Main, Germany under number HRB 7500.