Standard refund - eligibility, documentation, deadlines - Danish equities

23.01.2017

Who can apply for a standard refund?

Beneficial owners can reclaim withholding tax on dividends using the standard refund procedure as follows:

Eligible beneficial owners

Effective rate of tax after refund

Tax refund
available a

Residents of Double Taxation Treaty (DTT) country

Tax treaty rate or 27%, whichever is lower

27% minus
the tax treaty rate b

Foreign governments and approved international organisations0%27%
Qualifying U.S. pension funds0%27%
Residents of a country with an international treaty or convention with Denmark15%12%

a. Expressed as a percentage of the gross dividend amount.
b. Amount of relief will be 0% if the DTT rate exceeds 27%.

Documentation requirements

The documents to be submitted to Clearstream Banking, by the prescribed deadlines in order to apply for standard refund of withholding tax on dividends on Danish equities vary depending on the type of beneficial owner, as follows:

  • Residents of a Double Taxation Treaty (DTT) country
  • Place of residence statement (Form 02.051 for companies or Form 02.050 for private individuals); or
  • Certificate of Residence; - if form 02.051/02.50 are not provided

and

  • Power of Attorney for tax reclaim processes follow-up;
  • Letter of Request to Clearstream Banking for Reclaim of Danish Withholding Tax
  • Foreign governments and approved international organisations:
    • Request for Reclaim as a Foreign Government or International Organisation;
    • Power of Attorney for tax reclaim processes follow-up;
    • Letter of Request to Clearstream Banking for Reclaim of Danish Withholding Tax;
    • Proof of Tax Exemption.
  • Qualifying U.S. pension funds:
  • Free card ("frikort" - a copy);
  • Place of residence statement (Form 02.051 for companies or Form 02.050 for private individuals); or
  • Certificate of Residence; - if form 02.051/02.50 are not provided
  • Power of Attorney for tax reclaim processes follow-up;
  • Letter of Request to Clearstream Banking for Reclaim of Danish Withholding Tax.
  • Residents of a country with an international treaty or convention with Denmark:
    • Place of residence statement (Form 02.051 for companies or Form 02.050 for private individuals); or
    • Certificate of Residence; - if form 02.051/02.50 are not provided

and

  • Power of Attorney for tax reclaim processes follow-up;
  • Letter of Request to Clearstream Banking for Reclaim of Danish Withholding Tax

Furthermore, all reclaim requests must include sufficient supporting documentation to prove that:

  • The claimant has received the Danish dividend;
  • The claimant is the beneficial owner of the dividend:
  • Danish dividend tax has been withheld; and
  • The claimant is liable to pay tax in another country covered by a double taxation agreement at the time the dividend distribution was agreed, if a Double Taxation Treaty (DTT) application.

Consequently, when applying for a standard refund of withholding tax on dividends from Danish equities via Clearstream Banking, customers are requested to provide the following documentation, in addition to the normal reclaim documentation, as specified above per beneficial owner type:

  • Evidence of property ownership: This should be provided in the form of purchase receipts of the shares for which the refund is requested. The documentation must be certified with a stamp and signature from the issuing bank.
  • Evidence of the received cash dividend: Evidence should be provided in the form of dividend vouchers or Credit Advices, which must include the tax withheld and the account number to which the dividend has been transferred and bank statements from the foreign bank where it appears that the dividend received has been deposited into the cash account of the beneficial owner. Documentation must be provided from the full financial transfer chain, in case the dividend received has been transferred though several intermediaries and must be certified with a stamp and signature from the issuing bank.
  • Statement of holdings from the beneficial owner’s own local bank: This statement must show the number of shares held by the beneficial owner on the record date of the dividend payment for which the refund is requested. The documentation must also be certified with a stamp and signature from the issuing bank.
  • Loan Agreement: A shareholder loan agreement must be enclosed if the shares from which the dividend has been received have been borrowed under a shareholder loan agreement.
  • Other supporting documentation: Any other documentation which may be requested by SKAT in order for them to determine the eligibility of a beneficial owner for the refund request. The Danish Tax Authorities is reviewing the eligibility of the beneficial owners requesting tax reclaims on a case-by-case basis and consequently further documentation may be requested at any time.

 Statutory deadline for reclaiming withholding tax

The statutory deadline for reclaiming withholding tax, applicable to reclaims submitted via standard refund procedures, are generally three years after the date on which the dividend was distributed.

Note: Certain countries may have a longer statutory deadline than three years, as stipulated in the relevant Double Taxation Treaty. In such cases, this deadline will still continue apply.

Clearstream deadline for standard refund applications

The deadline by which Clearstream Banking must receive the documentation is at least two months before the statutory deadline. All standard refund applications received after this deadline will be processed by Clearstream Banking on a "best efforts" basis. However, in such cases, Clearstream Banking will apply an extra charge and accepts no responsibility for forms that have not reached the Danish Authorities by the date considered as being the statute of limitations deadline.

When are refunds received?

The estimated time for receiving a standard refund is one month from the date of receipt by the Danish Tax Authorities, although this can vary depending on when the application is filed and the complexity of the information supplied in the reclaim form.

Notes on tax reclaims

Customers warrant the completeness and accuracy of the information they supply to Clearstream Banking.

It is the customer's responsibility to determine any entitlement to standard refund of tax withheld, to complete the forms required correctly and to calculate the amount due. Clearstream Banking is under no obligation to carry out any investigation in respect of such information.

With respect to tax reclaims in general, customers are reminded that Clearstream Banking accepts no responsibility for their acceptance or non-acceptance by the tax authorities of the respective country.