U.S.A.: New free-format tax instructions requirements and related additional fee

In accordance with Clearstream Fund Centre Luxembourg’s¹ governing documents, Clearstream Fund Centre Luxembourg would like to inform clients that effective:

immediately

a new Swift template must be used by clients whenever sending free-format tax instructions (MT568 or MT599) for U.S. taxable income payments to Clearstream Fund Centre Luxembourg.

Background

In order to benefit from U.S. tax relief at source, tax refunds, and yearly tax reporting services, clients must provide Clearstream Fund Centre Luxembourg with an IRS form (W-8 or W-9 form) and a One-Time Certificate detailing, amongst other things, the client's status and account structure. Depending on the account structure selected in the One-Time Certificate, clients may have chosen to send per-payment Swift messages to Clearstream Fund Centre Luxembourg.

If such a Swift message is sent in free-format, some formatting rules must be implemented to improve operational efficiency and limit the risk of having a tax instruction rejected or wrongly applied by Clearstream Fund Centre Luxembourg.

Impact on clients

Clearstream Fund Centre Luxembourg’s clients who send their tax instructions on U.S taxable events via a free-format Swift message must adapt their Swift template and use the new requirements outlined below.

As of 1 September 2020, clients who send valid free-format tax instructions, but do not comply with the requirements outlined below will be charged an additional fee. This fee will be indicated in the Clearstream Fund Centre Luxembourg Fee Schedule.

The new requirements are as follows:

1. Clients should include only one tax instruction per Swift message. One tax instruction consists of:

• One U.S. taxable event (that is, one ISIN or common code and one payment date);
• One client account number at Clearstream Fund Centre Luxembourg;
• One tax rate to be applied to a specific quantity of positions in the targeted ISIN/common code.

2. Clients should specify all the following data in each Swift message:

• Function:
  • New or Cancel. If Cancel, please specify the reference of the Swift message to cancel;
• Country of taxation: U.S.;
• Client account number at Clearstream Fund Centre Luxembourg;
• Corporate Action Reference ID;
• Security code: ISIN or common code (the common code is recommended if the security is not deposited in the home market);
• Payment date (optional);
• Quantity instructed;
• Tax rate to apply to the quantity instructed
  • If 30% tax rate: Chapter 3 or Chapter 4;
• Depending on the account structure selected, any other relevant information or breakdown enabling correct 1042-S or 1099 reporting.

Further information

For further information, clients may contact the Vestima Execution Support, CFCL Sales and RM Support or their Relationship Officer.

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1. CFCL refers to Clearstream Fund Centre 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-261691.