Belgium: Dividends - new withholding tax procedure for foreign pension funds
Following our announcement C19004, Clearstream Banking1 informs customers that effective
foreign pension funds will no longer have the possibility to obtain a withholding tax exemption on dividends unless they are able to prove that the securities have been held in full ownership for an uninterrupted period of 60 days. Refunds requested on the basis of a holding of more than 60 days, may be rejected by the Belgian tax authorities if they can show that the dividends were linked to one or several legal acts which are not genuine.
If the securities have been held for less than 60 days, the beneficiary must demonstrate that the dividends are not linked to an arrangement which is not genuine, or which has been put in place for the purpose of obtaining tax advantage.
Impact on customers
Foreign pension funds wishing to reclaim withholding tax on Belgian dividends through Clearstream Banking can only do so through the standard refund procedure by providing the following documentation for each dividend payment, by the prescribed deadline.
- Annexe 26 – Précompte Mobilier;
- Full chain of original Credit Advices provided for each standard refund application by each intermediary between the final beneficial owner and Clearstream Banking;
- A bank statement from the BO. This is to prove that the BO has been credited with the net income payment. It must show the net amount credited to the bank account .
- Power of Attorney from the final beneficial owner (if Annex 26 signed by a third party);
- Power of Attorney from the Clearstream Banking customer;
- Letter of Request to Clearstream Banking for Reclaim of Belgian Withholding Tax.
- Proof evidencing that the beneficial owner has held the securities in full ownership for an uninterrupted period of at least 60 days as at the dividend payment record date.
Customers can use the attached Self-certification of holding (attestation de detention). It must be provided in original, printed on company’s letter head, signed and stamped. Only the French version will be accepted by the Belgian Tax Authorities. The English version is for information purpose only.
Important: Two templates exist, one to be used for T2S eligible securities deposited with CBF and one to be used for non-T2S eligible securities deposited with BNP.
- A full copy of the articles of association (AoA) of the pension fund including:
- Proof that the pension fund is operated solely or principally to administer and invest the funds to provide retirements benefits;
- A description of the purpose of the pension fund and its activities2
- Proof of the legal structure of the pension fund2
(if not included in the AoA, any other official documents proving the legal structure and the activity of the pension fund).
Specific documentation for reclaims higher than EUR 100,000
In order to have a reclaim for withholding tax of more than EUR 100,000 accepted, customers must justify the request by providing the following additional documentation together with the above mentioned reclaim documentation:
- A copy of the Credit Advice from the previous dividend payment, if received by the same beneficial owner.
- A Statement, signed by the last intermediary in the chain. It must contain the details of all the transactions (purchase, sale, lending, etc.) that occurred during the year preceding the dividend payment date and the month following the dividend payment date. This statement must mention the following trade details: security name, ISIN, quantity of shares, trade date, settlement date, transaction type (purchase/sale) and the counterparties of the trade. This is only required if there were transactions between the previous dividend payment and the dividend payment date for which the reclaim is submitted. This is a free format document, no official template exists.
Important: Both the statement and the credit advice must be certified by the customer with two authorised signatures.
Documentation for standard refund must be provided in original, duly completed and signed. Incomplete reclaim files will be rejected.
The statutory deadline for reclaiming withholding tax is five years as of 1 January of the year in which the tax withheld was remitted to the Belgian Treasury.
The deadline by which Clearstream Banking must receive the documentation for an application is, at the latest, two months before the relevant statutory deadline.
All refund applications received after this deadline will be processed by Clearstream Banking on a “best efforts” basis but, in such cases, Clearstream Banking will apply an extra charge. Clearstream Banking accepts no responsibility for forms that have not reached the Belgian Tax Authorities by the date considered as being the statute of limitations deadline.
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.