Iceland: Amended tax procedure for Icelandic taxable debt securities
Further to Announcement A20081, concerning the approved proposal to amend the Withholding Tax Act No. 45/1987 with effective date 13 May 2020, Clearstream Banking1 is pleased to inform customers that, effective
a new simplified tax procedure will be applicable for capital gains and dividend distributions resulting from Icelandic debt securities2 on or after 13 May 2020, which has been enabled as a result of our ongoing collaboration with the Icelandic authorities.
Important note: The new tax procedure exempts LuxCSD from certain reporting and withholding tax responsibilities in regard to income distributions and capital gains tax. Customers/beneficial owners are therefore strongly recommended to seek advice from their own tax advisor to ensure they are fully aware of their responsibilities and liabilities towards the Icelandic Tax Authorities or other authorities, as applicable.
Icelandic taxable debt securities, held on Clearstream Banking’s account at LuxCSD S.A. (via Nasdaq CSD), may only be held by the following:
- Non-resident beneficial owners; and
- Clearstream Banking customers that are Icelandic intermediary banks complying with Article 3.2 of Act no. 94/1996; or
- Icelandic resident beneficial owners, if held via a Clearstream Banking customer, that is an Icelandic intermediary bank complying with Article 3.2 of Act no. 94/1996.
Positions that are held on behalf of Icelandic beneficial owners, may not be held via Clearstream Banking in any other cases.
Taxable debt securities
Default rate of withholding tax applied in Clearstream Banking
There is no withholding tax withheld through Clearstream Banking on taxable debt securities held in Clearstream Banking. Withholding tax may however be payable on interest and redemption payments. Clearstream Banking does not assist in this regard. Please consult your tax advisor for full information.
Relief at source
Customers are requested to provide the following documentation depending on their own residency and the residence of the underlying beneficial owners.
Clearstream Banking customers that are non-residents and holding for non-resident beneficial owners
No action is required by the Clearstream Banking customers, as Clearstream Banking applies by default 0% withholding tax on interest and redemption payments from the above-mentioned debt securities.
Clearstream Banking customers that are Icelandic Banks complying with Article 3.2 of Act no. 94/1996
A One-Time Certificate for Icelandic Banks complying with Article 3.2 of Act no. 94/1996, which is valid until revoked.
Customers that are Icelandic Banks complying with Article 3.2 of Act no. 94/1996 will automatically receive income payments with 0% withholding tax. Certification is however requested from such customers for reporting purposes to ensure these entities are reported to the RSK as Icelandic recipients instead of non-residents.
Note: Such entities are considered as Icelandic tax withholding agents, implying that they must withhold the appropriate tax amounts from their respective clients, and report these amounts to the Icelandic tax authorities.
Deadlines for receipt of the required documentation by Clearstream Banking
Interest and redemption payments
Deadline for receipt by
One-Time Certificate for Icelandic Banks complying with Article 3.2 of Act no. 94/1996
10:00 CET, five business days before interest or redemption payment date.
Important note: Clearstream Banking reminds customers that, in the absence of any certification from customers that are Icelandic Intermediary banks, Clearstream Banking will report to the RSK interest and redemption payments as being paid to non-resident customers holding for non-resident beneficial owners only.
Capital gains tax
Default rate of capital gains tax applied in Clearstream Banking
There is no capital gains tax withheld through Clearstream Banking on taxable debt securities held in Clearstream Banking. Capital gains tax may however be payable on specific gains. Clearstream Banking does not assist in this regard. Please consult your tax advisor for further information.
Important note: Customers are reminded that In Iceland, any gains realised on debt securities are considered for tax purposes as “interest payments”.
To comply with Icelandic disclosure and reporting requirements, Clearstream Banking is requested to provide:
- On a monthly basis, the name and transaction details of the Clearstream Banking customer to the Icelandic tax authorities; and
- Upon request, disclosure of the positions of the ultimate beneficial owners on a specified date in a given security to the tax or any other relevant authorities in Iceland.
Customers are kindly requested to refer to the CBL Disclosure Requirements - Iceland for full details of the disclosure requirements.
Impact on customers
In accordance with the amended tax procedure, customers are requested to comply with the above procedure immediately.
Further, customers/ beneficial owners are strongly recommended to seek advice from their own tax advisor to ensure they are fully aware of their responsibilities and liabilities towards the Icelandic tax authorities or other authorities, as applicable.
Detailed information will be provided as it becomes available.
For further information, customers may contact Clearstream Banking Client Services or their 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.
2. Taxable Icelandic debt securities are those not listed on the RSK ISIN exemption list.