Finland: TRACE - New relief at source and quick refund process - Additional information on process for customers holding their own assets with Authorised Intermediary status
Further to Announcement A20183 concerning the new TRACE - Relief at source and quick refund process for publicly listed Finnish equities, Clearstream Banking1 informs customers that effective
the Finnish Tax Authority (FTA) has recently clarified that beneficial owners, who have Authorised Intermediary (AI) status, may also elect to take the tax liability and responsibility for the dividends it receives from its own assets, provided such AI notifies the upstream custodian (Clearstream Banking), that it will:
- Take the responsibility and liability of its own dividends (where it is the dividend beneficiary); and
- Undertake to report and include, in its own annual AI information return (TRACE reporting), its own beneficial owner information and related information on the dividend, which it received at the time of the dividend payment for its own assets.
Customers may also view the FTA’s Frequently asked questions on Authorised Intermediary's responsibilities and liabilities, which were updated on 1 March 2021 regarding this topic (Question 4).
Following the clarifications from the FTA, Clearstream Banking is pleased to inform customers that the relevant tax certification, used for the purpose of obtaining relief at source or quick refund, has been updated accordingly and that customers holding their own assets may now provide the tax certification as follows:
1. Customers holding their own assets with no AI status or customers holding their own assets with AI status but not electing to assume the AI responsibility and liability for their own assets
There is no change in the documentation requirements, meaning:
- Such customers should provide their own assets tax certification, as described in Announcement A20183; and
- Clearstream Banking (having AI status) will assume the responsibility and liability for the dividends in question, meaning it will need to receive the ISD-E form (and other beneficial owner certification, if applicable) and will report the beneficial owner (the Clearstream Banking own asset client) and the related income received, to the FTA etc.
2. Customers holding their own assets with AI status electing to assume the AI responsibility and liability for their own assets
Customers holding their own assets with AI status, may elect to assume the tax responsibility and liability for the dividends received from their own assets, by providing the following new certificate: One-Time Certificate publicly listed Finnish Equities – Own asset client assuming AI responsibility and liability for its own assets (OTC) (see attachment below).
The One-Time Certificate must be completed and signed by the customer (being the final beneficial owner) and remains valid until revoked.
Important: Customers must select one One-Time Certificate, either for Clearstream Banking S.A. (CBL) or Clearstream Banking AG (CBF), as applicable for their account, meaning:
- CBL customers are requested to provide the CBL version of the form;
- CBF customers, including those with CBF-i accounts, are requested to provide the CBF version.
To apply for a quick refund of withholding tax on dividends, the same documentation requirement is applicable, as for the relief at source process, except, customers must in addition also send a per-payment request for a quick refund, as described in Announcement A20183.
Important note on point 2 above:
As the customer is assuming full AI tax responsibility and liability, Clearstream Banking would neither need to receive, from the beneficial owner (the Clearstream Banking customer), the ISD-E form (or other relevant beneficial owner certification) nor need to report the details of the beneficial owner in the annual TRACE reporting. Instead such beneficial owner certification should remain with the customer (as beneficial owner) and the customer (as beneficial owner) would be obliged to report themselves and the income they receive to the FTA in its own annual TRACE reporting.
The FTA has further clarified that, if an AI has taken responsibility of its own dividends (the AI is the final dividend beneficiary), it cannot get released from liability (referred to in Section 10c(2) of the Tax at Source Act) by proving that it has fulfilled its responsibilities to take reasonable measures and did not know, or did not have reason to know, that the dividend beneficiary provided incorrect or incomplete information, since it would itself be the dividend beneficiary.
The deadlines for the submission of the required documentation, for the purpose of obtaining relief or quick refund from withholding tax on dividends on publicly listed Finnish equities are the same as described in Announcement A20183.
Impact on customers
At present, the current relief at source and quick refund process and documentation requirements for dividends received from publicly listed Finnish equities remains the same.
However, customers holding own assets and having AI status, will, with immediate effect, also have the option to assume the tax responsibility and liability for the dividends it receives from its own assets, provided the relevant new certification is provided within the stated deadlines.
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.