South Korea: Revised DTT Protocol with Luxembourg now in force


The South Korea Ministry of Foreign Affairs has announced that the revised South Korea-Luxembourg Double Taxation Treaty (DTT) Protocol came into force as of 4 September 2013. The Protocol basically abolishes Article 28 of the DTT.

This is further to our Announcement A11077, dated 9 June 2011.

As a consequence, holding companies such as FCPs, Luxembourg SICAVs (sociétés d'investissement à capital variable) and SICAFs (sociétés d'investissement à capital fixe) will be eligible to benefit from a reduced tax rate provided that they complete and submit the relevant tax forms (see Guidance for the use and completion of tax forms on the Clearstream website.

Impact on holders of South Korean ADRs

Luxembourg SICAVs/SICAFs may be eligible to benefit from a reduced tax rate in accordance with the DTT for income proceeds from South Korean ADRs held at the Depository Trust Company (DTC) issued on/after 4 September 2013.

South Korean tax law is unclear with regard to how SICAVs and SICAFs should claim eligibility for relief under the new DTT. The Korea Securities Depository recommends that SICAVs and SICAFs file Overseas Investment Vehicle (OIV) or Overseas Public Collective Investment Vehicle (OPCIV) forms as appropriate.

Entitlement for an OIV/OPCIV entity is contingent upon the eligibility of the underlying beneficial owner. Determination of final entitlement will be made at the discretion of the South Korean local custodian.

Further information

We continue to monitor the situation and will provide more details as they become available.

For further information, customers may contact the Clearstream Banking1 Tax Help Desk on:

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.

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).

This Announcement is provided solely for information purposes. It is not intended to constitute specific advice and customers should consult their own legal, tax or other advisors as appropriate. Clearstream Banking may provide updates as further information becomes publicly available but will not be responsible for doing so. Clearstream Banking has no responsibility for any loss occasioned as a result of the use of information in this document.

As a registered customer, subscribe to our free email alerts service to receive immediate, daily and/or weekly notification of the latest customer publications on our website. Unsubscribe at any time; we respect your email privacy.