Israel: Tax certification for obtaining relief at source
our local depository, Citibank Israel, has recently confirmed that Form A/114 is a mandatory document in order to obtain relief at source from withholding tax on dividends and interest payments from Israeli securities.
Due to market practice, this form was not requested in the past but recent scrutiny by the Israeli Tax Authorities has resulted in a change of process.
Impact on customers
In order to obtain relief at source from withholding tax on dividends and interest from Israeli securities for eligible beneficial owners through Clearstream Banking1, documents must be submitted as follows:
- In order to hold Israeli securities, you must have submitted:
- An Israeli Securities - One-time Certificate.
- Then, in order to obtain relief at source, you must submit:
- A Breakdown of Holdings (only required for omnibus accounts);
- A List of Beneficial Owners - Israeli Securities;
- A Certificate of Tax Residency;
- A Form A/114; and
- A Certificate of Tax Exemption (for tax-exempt entities only).
Eligible beneficial owners for whom the customer does not provide the required documentation will not be able to obtain relief at source but will be recorded as undisclosed and will consequently be subject to withholding tax at the maximum applicable rate.
Further information regarding the relief at source process is available via Market Taxation Guide – Israel.
About Form A/114
The form is valid annually, from 1 January to 31 December.
It must be provided at the latest two business days after the first relevant interest or dividend record date, by 10:00 CET.
The following sections are mandatory and have to be fully completed by the beneficial owner of the income:
- Part A - Claim for reduced rate of withholding tax/exemption from withholding tax in Israel on payment to a non-resident:
Beneficial owners must indicate the related double taxation treaty to which they refer.
- Part B - General Nature of the transaction and income:
Beneficial owners must indicate in point 2 the type of income received.
- Part C - The recipient:
Beneficial owners must fill in this part in order to disclose their identity.
- Parts D and E are payment specific and should be left blank if the form will be applied to multiple income payments.
- Part G – Declaration of the recipient:
Signature of the beneficial owner or its legal representative, in which case a Power of Attorney has to be provided together with the documentation for relief at source.
- Part H – Certification of foreign income tax authorities:
A certificate of tax residency is a full substitute for this part.
Customers are reminded that no standard refund of tax withheld on dividends from Israeli equities is available through Clearstream Banking.
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 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, and 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.