Portugal: Bonds quick refund - BNP Paribas Securities Services enhanced controls on tax documentation

15.03.2019

Clearstream Banking1 would like to inform customers that following several rejections of tax documentation from our local depository BNP Paribas Securities Services (BNP) over the past year, we have asked them to clarify their new requirements for the acceptance of the form Mod.25-RFI.

Effective

18 March 2019

the following procedure applies.

Impact on customers

Customers wishing to obtain a tax exemption on Portuguese bonds through the quick refund procedure must provide the following documentation by the prescribed deadline.

Documentation requirements

A Form Mod. 25- RFI, duly completed with special attention to the relationship between the entity mentioned in Box I and the signatory in Box IX as follows: 

  • The Mod.25-RFI is completed by the beneficial owner (BO) (individual), with no legal representative: Box IX must be signed by the BO.     
  • The Mod.25-RFI is completed by the BO (legal entity), with no legal representative: Box IX must be signed and stamped by the BO. If not stamped a list of authorised signatories on company’s letterhead must be provided. 
  • The Mod.25-RFI is completed and signed by a legal representative of the BO (legal entity or individuals):
    • Box VIII must be completed with the details of the legal representative, and 
    • Box IX must be signed and stamped by the legal representative. If not stamped a list of authorised signatories on company’s letterhead must be provided, and
    • A power of attorney allowing the legal representative to sign on behalf of the BO. 

BNP also confirmed some main reasons for rejection of the documents:

  • Damaged documents;
  • Not original;
  • The “copy for the entity obliged to withhold tax” is not submitted;
  • Not the latest version of the form;
  • Crossing-out, liquid corrector or written in pencil;
  • Not printed on both sides;
  • Mandatory fields not completed;
  • Missing the signature of the beneficial owner or its representative where applicable.

Any form Mod.25-RFI received after 18 March 2019 that does not comply with the above requirements will be automatically rejected.

AND

A One-Time Certificate for Portuguese Debt Securities - DL 193/2005 amended by Law 83/2013 must be provided by all customers if not already provided before the first interest payment date. The OTCs are valid until revoked and will be taken into consideration for the future payments however no OTC, whatever the boxes ticked, will be considered as an instruction for quick refund without a proper per payment instruction (please refer to the per-payment instruction description below). 

AND

A List of Portuguese beneficial owners
Customers applying for the standard rates of 25% or 28% on behalf of Portuguese BOs must provide a list of BOs through the BO list upload functionality on the Clearstream website.
The list of beneficial owners must be received at the latest by the 10th of the month following the one when the payment took place by 10:00 CET.

AND

A per payment instruction (electronic instruction)

All customers applying for a quick refund, including customers who provided an OTC with box 1 and 2 ticked, are required to submit a SWIFT MT565, Xact Web Portal or CreationOnline instruction specifying: 

  • Your account number; 
  • ISIN; 
  • Corporate Action ID, 
  • Instructed quantity (please refer to the eligible balance on your account) 
  • Tax rate to apply (to be included in field :92a::TAXB// for SWIFT or Tax Rate for Xact Web Portal and CreationOnline).
  • Your full contact details

Holders are required to specify in field :70E::INST for SWIFT users or in the corporate actions narrative for Xact Web Portal and CreationOnline users the following wording, as applicable:
“quick refund for non-Portuguese residents”, or
“quick refund for Portuguese residents”

if no wording is provided Clearstream will reject the instruction.

Quick refund deadline

The deadline for reclaiming withholding tax via the quick refund procedure through Clearstream Banking depends on the fiscal residency and eligibility of the beneficial owner for tax exemption or reduced tax rate, as follows:

  • For non-residents of Portugal entitled to full quick refund of withholding tax under the application of the Special Debt Regime: at the latest five (5) business days before the sixth month after the applicable payment date, by 10:00 CET; or
  • For residents of Portugal entitled to full quick refund of withholding tax under the application of the 2008 State Budget Law: at the latest 10:00 CET on the 10th of the month (or the last business day prior to the 10th, if the latter is not a business day) following the month in which the interest payment was made; or
  • For residents of Portugal entitled to reduced rate of withholding tax (25% / 28%): at the latest 10:00 CET on the 10th of the month (or the last business day prior to the 10th, if the latter is not a business day) following the month in which the interest payment was made.

Further information

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.