South Korea: New disclosure requirements for Depository Receipt holders
Note: This Announcement was originally published on 12 June 2013. Updates since then are shown in highlight.
Clarifications and changes implemented by the South Korean Ministry of Strategy and Finance (MoSF) to the withholding tax relief process have now come into force.
In order to benefit from the reduced rate of withholding tax provided for under the terms of a Double Taxation Treaty (DTT) with South Korea, all customers holding South Korean American and Global Depository Receipts (ADRs and GDRs) are now required to disclose the name, complete street address and personal identification (ID) number of each respective beneficial owner.
This is further to our Taxflash T13034, dated 28 May 2013, and Announcement A12199, dated 30 October 2012.
Personal identification (ID) number
The personal ID number to be provided depends on the beneficial owner’s country of residence, as follows:
- In jurisdictions such as the U.S.A., where a Taxpayer Identification Number (TIN), such as an SSN or EIN, is issued, the TIN is the number that must be provided as the personal ID number.
- For jurisdictions such as Japan, where TINs are not issued, a valid personal ID number must be used in place of a TIN.
For these jurisdictions, valid personal ID numbers include, but are not limited to, (for individuals) date of birth, passport number, driving licence number; and (for entities) resident registration number and date of establishment or date of registration.
In addition, entities that have no legal or fiscal personality (such as partnerships, trusts, Regulated Investment Companies (RICs) and limited liability companies, with the exception of incorporated funds - for example, mutual funds, pension funds) are now required to disclose their underlying beneficial owners.
The South Korean National Tax Service (NTS) has taken the position that partnerships, limited liability companies, unit trusts, holding companies and mutual funds are generally considered to be Overseas Investment Vehicles or Overseas Public Collective Investment Vehicles (OIVs/OPCIVs).
Note: Beneficial owners based in Luxembourg must provide two original Certificates of Residence per ISIN. Thus, a Luxembourg customer holding four South Korean ADRs/GDRs must provide eight original Certificates of Residence to apply to all events. The certificates must be issued within the six-month period before the relevant record date and must be in English.
OIV requirements
Holders deemed to be OIVs are required to provide an original Form 29-13 and Annex to Form 29-13 (revised version attached) at the time of submission.
Note: Individuals are not OIVs and will continue to disclose - as in the December 2012 South Korean event period - the name, complete street address and personal identification (ID) number of each respective beneficial owner and, furthermore, be exempt from submitting Form 29-12.
Entity types that the NTS generally does not consider to be OIVs/OPCIVs include, but are not limited to, individuals, corporations (not investment fund corporations), government pension schemes (including public employees retirement plans), other pension plans whose participants are all resident in the treaty country in which the pension plan has been formed, and charitable entities (foundations, endowments, educational or religious institutions) that have sole discretion over the use of their profits.
Each taxpayer should consult with its own independent tax advisor to determine its status for South Korean tax purposes within the meanings subscribed to by the NTS. Moreover, all ADR and GDR holders opting for a favourable withholding tax rate will continue to be exempt from submitting Form 29-12.
Pension/non-profit organisation requirements
Holders deemed to be pension/non-profit organisations are required to furnish original supporting documents substantiating the fact that the applicant is:
- A pension fund established under the laws of a country that has entered into a DTT with South Korea and whose pension plan is deemed equivalent to a South Korean pension plan; or
- A non-profit organisation, established under the laws of a country that has entered into a DTT with South Korea, that does not distribute its profits to its members; or
- An OIV recognised as a beneficial owner (opaque entity) under the terms of the DTT. Supporting documentation that qualifies as evidence includes, but is not limited to, a certificate of residence (Form 6166 for U.S. residents) and a Form 72-2.
These documents may remain valid for up to three years provided that the underlying holders of the OIV do not change during that time. A new original Form 29-13 and Annex to Form 29-13 are required when the underlying holders of the OIV change for a specific record date.
Example: OIV “Fund ABC” has two underlying holders: “Partner 1” residing in the U.S.A. and “Partner 2” residing in the UK. The participant would, in this case, enter two separate line items, the first being “Fund ABC – Partner 1” with a certificate of residence in the U.S.A. and the second as “Fund ABC – Partner 2” with a certificate of residence in the UK, each with its corresponding share amount. Form 29-13 and Annex to Form 29-13 are required to be in the name of “Fund ABC” and should be completed by the fund’s representative.
OPCIV requirements
Holders deemed to be OPCIVs are required to provide an original Form 29-13 at the time of submission. This document may remain valid for up to three years provided that the underlying holders of the OPCIV do not change during that time. A new original Form 29-13 is required when the underlying holders of the OPCIV change for a specific record date.
Example: 25% of the underlying holders of OPCIV “Fund ABC” are resident in the U.S.A. and 75% in the UK. The participant would therefore enter two line items, the first being “Fund ABC” with 25% of the shares in U.S.A. and the second as “Fund ABC” with 75% of the shares in the UK. Form 29-13 is required to be in the name of “Fund ABC” and should be completed by the fund’s representative.
Submission of information
The list of beneficial owners including name, complete street address and personal identification (ID) number of each respective beneficial owner (and not original Form 29-13 and Annex to Form 29-13) must be submitted to Clearstream Banking1, in the specific Excel spreadsheet (attached below), via the Upload BO List facility on our website under Asset Services / Tax Services / Upload BO List / Beneficial Owner List / South Korea / South Korean Depository Receipts, followed by the completion of step 3, 4 and 5.
OIVs/OPCIVs are required to provide, per respective dividend payment period, an original Form 29-13 plus a copy of the original per participant with positions in each Korean ADR and GDR ISIN. For example, a customer holding December record date positions in 10 South Korean ADR and GDR ISINs will submit one original and nine copies for that cycle. Similarly, a customer holding four South Korean ADR and GDR ISINs in June will submit one original and three copies.
The following important points should be noted:
- Customer submissions via the Upload BO List facility on our website that do not use the Excel spreadsheet format as attached will be rejected.
- Files submitted by email will be disregarded.
- The deadline by which the customer must provide us with the aforementioned beneficial owner details and/or Form 29-13 will be published as a pre-notification per event.
- For any holder who does not provide the required underlying information, or if the same address and/or personal ID number are improperly used for multiple beneficial owners, the statutory rate of withholding tax (currently 22%) is applied.
- The maximum withholding tax rate (currently 22%) is applied to any claimant for whom this information either has not been provided within the deadline or is incomplete or inaccurate.
N.B.: The content of this Announcement (including any attachments and other links) are for informational purposes only and is not intended and should not be considered to be legal advice on any subject matter. Readers of this Announcement, whether customers or otherwise, should not act or refrain from acting on the basis of any information included in this Announcement without seeking appropriate legal or other professional advice. Copies (in paper or electronic form) of the content may be delivered to a third party for personal use only.
Further information
For additional information on the requirements described above, please see our Announcements A12120, dated 25 June 2012, and A12065, dated 26 March 2012 (forms attached below).
For further information, customers may contact the Clearstream Banking Tax Help Desk on:
| Luxembourg | Frankfurt | |
| Email: | tax@clearstream.com | tax@clearstream.com |
| Telephone: | +352-243-32835 | +49-(0) 69-2 11-1 3821 |
| Fax: | +352-243-632835 | +49-(0) 69-2 11-61 3821 |
or Clearstream Banking Customer Service or their Relationship Officer.
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1. Clearstream Banking refers collectively to 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 (CBF) and Clearstream Banking S.A., registered office at 42, avenue John F. Kennedy, L-1855 Luxembourg, and registered with the Luxembourg Register of Commerce and Companies under number B-9248 (CBL).
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