Ireland: CBL to have QI status in the Irish Market
Clearstream Banking 1 informs customers that, as of record date
1 April 2019
Clearstream Banking S.A. (CBL) will act as a Qualified Intermediary (QI) for the Irish Market.
The QI status enhances the existing service offering for customers, as it provides the possibility to apply for tax relief at source for eligible beneficial owners or customers.
The sections below describe the new aspects of the procedure for tax relief at source processing for Irish domestic securities only.
Prerequisites for obtaining tax relief at source on Irish domestic equities
To allow CBL to apply tax relief at source, customers must open a segregated account on which they will hold exclusively positions eligible for tax exemption and that are duly certified. The required certification described below has to be received by Clearstream Banking before the transfer of the securities in this exempt account. After the receipt and validation of the certification, the customer account will be flagged X (exempt) and all dividends from Irish domestic equities will be paid gross.
Eligibility criteria for tax exemption
To apply for tax relief at source, the direct customer of Clearstream Banking must:
- be the beneficial owner of the Irish equities and is a qualifying non-resident person or an excluded Irish person, OR
- has been authorised as Qualifying Intermediary (QI) by the Irish Revenue Commissioners and holds Irish equities on behalf of qualifying non-resident persons or excluded Irish persons, or on behalf of an underlying intermediary also authorised as QI and holding Irish equities on behalf of qualifying non-resident persons or excluded Irish persons.
The following main categories of beneficiaries are considered as being qualifying non-resident persons:
- an individual or an unincorporated entity which is neither resident nor ordinarily resident in Ireland, but resident in another EU Member State or in a Double Taxation Treaty (DTT) country for tax purposes;
- a company resident in another EU Member State or in a DTT country that is not controlled, either directly or indirectly, by Irish residents;
- a company (not resident in Ireland) ultimately controlled by residents of another EU Member State or of a DTT country;
- a company of which the principal class of shares (either belonging to a 75% parent, or to two or more companies by which the company is wholly-owned) is substantially and regularly traded on a recognised stock exchange in another EU Member State or in a DTT country, or on such other exchange as may be approved of by the Minister of Finance;
- companies that are wholly owned by two or more companies, each of whose principal class of shares are substantially and regularly traded on one or more recognised stock exchanges in a relevant territory.
The following main categories of beneficiaries are considered as being excluded Irish persons:
- an Irish resident company;
- a pension scheme;
- manager of approved retirement funds, approved minimum retirement funds and special savings incentive accounts;
- a qualifying employee share (ownership) trust;
- a collective investment undertaking;
- a charity;
- a sports body that has been granted exemption from tax by The Revenue;
- a designated stockbroker who is receiving relevant distributions as part of the income of a special portfolio investment account;
- a qualifying fund manager who is receiving relevant distributions as income arising in respect of assets held in an approved retirement fund (ARF);
- Irish Exempt Unit trusts;
- Irish Person Retirement Savings Account administrators;
- certain other persons resident in Ireland.
The complete lists and further details are available on The DWT Technical Guidance Notes.
Certification requirements for tax exemption
In order to flag their dedicated account as tax exempt and consequently obtain gross payments on dividends from Irish domestic equities, customers must provide the following certification before the transfer of the impacted positions on the respective account:
One-time certificate for tax exemption on Irish domestic equities certifying that the Clearstream Banking direct customer:
- has been authorised as Qualifying Intermediary (QI) by the Irish Revenue Commissioners and holds Irish equities on behalf of a qualifying non-resident person or an excluded Irish person, or
- is the beneficial owner of the Irish equities and is a qualifying non-resident person or an excluded Irish person.
CBL customer is a Qualifying Intermediary (QI)
A copy of the document delivered by the Irish Revenue Commissioners and proving the QI status.
Important note: Customers are responsible to ensure that for each final beneficiary applying for tax exemption, valid Irish DWT forms are in the possession of the QI having the positions of the final beneficiary in its books. These forms must be provided upon request of the Irish authorities. Furthermore, please note that the Irish tax authorities maintain the right to request additional information or forms at any time. Customers being QI in Ireland and beneficial holders are responsible and liable for any tax relief, penalties, and for maintenance and provision of all materials supporting the tax exemption.
CBL customer is the final beneficial owner and eligible for tax exemption
Depending on its status and residency, one of the following certificates must be provided together with the One-time certificate for tax exemption on Irish domestic equities:
For excluded Irish persons:
- Form V3: Exemption from DWT for Certain Persons Resident in Ireland in respect of Relevant Distributions
- Declaration to be made by an Irish Exempt Unit Trust, for the purpose of Exemption from Dividend Withholding Tax (DWT)
- Declaration to be made by an Irish Personal Retirement Savings Account (PRSA) Administrator for the purpose of Exemption from Dividend Withholding Tax (DWT)
For qualifying non-resident persons:
- Form V2C: Exemption from DWT for a Qualifying Non-Resident Person (not being an individual or a company)
For qualifying non-resident persons, the declaration must, where appropriate be supported by documentary evidence. The supporting documentation is as follows:
A declaration made by a non-resident person (not being a company) must be accompanied by a certificate of residence from the tax authority in the country of the person’s residence.
A declaration by the trustee or trustees of a non-resident discretionary trust must be accompanied by:
- a certificate given by the tax authority of the country in which the trust is, by virtue of the law of that territory, resident for the purposes of tax, certifying that the trust is resident in that territory;
- a certificate from the trustee or trustees showing the names and addresses of the settlers and beneficiaries of the trust; and
- a certificate from Revenue indicating that they have seen the certification and have noted its contents.
Validity of the tax certificates
Exemption declarations for resident (excluded) persons remain valid until such time as the excluded person notifies CBL as QI that they have ceased to be an excluded person.
Exemption declarations for qualifying non-resident persons remain valid for a maximum period of 6 years. This period of validity is determined by the date on which the relevant certificates accompanying the exemption declarations are issued. The legislation confirms that these certificates remain valid for the period from the date of issue until 31 December in the fifth year following the year in which the certificate was issued, thus providing for a maximum period of validity of six (6) years where a certificate was issued on 1 January in a particular year.
Important note: According the DWT Technical Guidance Notes, each QI is obliged to obtain, validate and keep the original tax certification proving the eligibility for tax exemption, to be submitted to the Revenue upon request. Consequently, the certificates provided by customers in the past end their validity on 29 March 2019 and any tax exemption will be granted as of 1 April 2019 only based on new original and valid certification.
Eligible beneficial owners that could not apply for tax relief at source, may apply for standard refund. The procedure explained in the Market Taxation Guide - Ireland remains unchanged.
For further information, please contact the Clearstream Banking Tax Help Desk or Clearstream Banking Client Services or your Relationship Officer.
1. 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 (for Clearstream Banking AG customers using Creation Accounts), registered office at 61, Mergenthalerallee, 65760 Eschborn, Germany and registered in Register B of the Amtsgericht Frankfurt am Main, Germany under number HRB 7500.