Portugal: Double Taxation Treaty forms MOD 21-RFI and MOD 22-RFI - amended certification requirements - Update
Note: This announcement, originally published on 7 October 2019, was updated as Clearstream Banking's local depository provided clarifications about the validity of the DTT forms. The changes are highlighted.
Clearstream Banking1 informs customers that, further to our Taxflash T19012, the law proposal no 180/XIII, amending the certification requirements related to the forms MOD 21-RFI and MOD 22-RFI, was approved by the President of Portuguese Republic on 16 August 2019 and new Law N° 119/2019 was published on 18 September 2019.
1 October 2019
the double taxation treaty forms must be certified with a separate certificate of residence (COR).
According to the current certification process when applying for relief at source, quick refund or standard refund on dividend payments, customers are asked to provide the MOD 21-RFI or MOD 22-RFI certified by the beneficial owner’s local tax authorities or accompanied with a separate certificate of residence.
The new Law 119/2019 eliminates the direct certification on the forms by the tax authorities of the country of residence of the beneficial owners. Consequently, only accompanying certificates of residence will be considered as a valid certification of the DTT forms as of 1 October 2019.
Impact on customers
It is still unclear if there will be a change to the layout of the existing forms.
Our local depository BNP Paribas Securities Services has not yet obtained from the Portuguese Tax Authorities (PTA) all clarifications on the impacts of this change. However, it is their understanding that the following validity continue to apply:
- Mod 21-RFI certified directly on the form with a date prior to 1 October 2019 should be considered valid for a period of one year from the certification date;
- Mod 22-RFI certified directly on the form with a date prior to 1 October 2019 should be considered valid.
From 1 October 2019 customers must provide any new Mod 21-RFI or MOD 22-RFI together with a separate COR, signed and stamped by the beneficial owner’s local tax authorities. It was recently clarified that:
- A Mod 21 or 22-RFI certified in box III/IV will not be rejected by BNP if it is accompanied with a valid separate COR.
- For a refund request, customers have to provide a separate COR with each Mod 22-RFI, that is a separate COR for each refund request.
To be valid, the COR must fulfil two conditions:
- confirm the residency of the beneficial owner for tax purposes and cover the period when the withholding tax took place, and
- confirm that the beneficial owner is subject to tax in its country of residence.
No specific guidelines were issued by the PTA concerning the wording that should be included on the COR. Based on advice received from BNP Paribas Securities Services, we understand that a COR should be acceptable if and when it includes either the express reference “liable to income tax” (rather than subject to tax) or a reference to the article 4 of the tax treaty. Customers will be informed of any change to the above as soon as further developments or official clarifications become available.
For further details concerning the process of certification and the applicable deadlines please refer to the Market Taxation Guide - Portugal.
For further information, please contact the Clearstream Banking Tax Help Desk, 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.