Foreign shares in collective safe custody: Relief at source and quick refund on Russian DRs in 2019 - update

05.12.2019

Note: This announcement, originally published on 7 January 2019 has been updated further to add new deadlines for ISIN US8766292051. Changes have been highlighted.

This announcement reflects the Russian Depository Receipt (DR) dividend events taking place in 2019 and includes the Clearstream Banking1 procedure and deadlines for obtaining relief at source and quick refund for ISINs US8766292051, US7785291078, US73181P1021, US80585Y3080, US55315J1025, US67011U2087, US36829G1076, US0373763087, US7785291078, US69343R1014, US7821834048, US69343P1057,  US6074091090, US8688611057, US8688612048, US3682872078 and US3133541025.

The original Depository Trust Company (DTC) notice with full requirements is available from DTC’s website (CUSIP or security name can be used to retrieve the notice) and customers are strongly encouraged to obtain this notice to ensure they are aware and comply with the full requirements for these events.

Tax procedure for relief at source or quick refund

The Federal Law #366-FZ, dated 24 November 2014, “on changes to the part two of the Tax Code of Russian Federation and some other federal laws of Russian Federation” and Federal Law #376-FZ, dated 24 November 2014,“on changes to the Tax Code of Russian Federation” introduced, inter alia, the abolition of the 30% “punitive” tax rate for the non-disclosed positions. As from 1 January 2015, with respect to non-disclosed securities, withholding agents apply the standard tax rate of 15% by default.

However, the disclosure requirements stated by the Russian securities markets legislation are still in force (as such requirements have not been abolished). Consequently, the DR agents continue to request the aggregate disclosure of the positions to be taxed at 15% statutory tax rate. Customers applying for 15% statutory rate are strongly encouraged to disclose the country and status of the final beneficial owners.

General information regarding withholding tax and disclosure procedures for Russian DRs is available in Announcements A14027, A14124, A14154 and A15082.

Documentation requirements

In order to benefit from relief at source or quick refund on income from Russian DRs, customers will need to ensure that the following documents are provided to Clearstream Banking before the respective deadline of the ISIN listed in the table below.

One-Time Certificate for DRs with Russian underlying securities

The One-Time Certificate (see version attached below) must be submitted by all customers, regardless of the residency and status of the beneficial owners. It must further be signed and completed by the customer and remains valid until revoked.

Breakdown of Holdings

If Box 3 was ticked in the One-Time Certificate, a Breakdown of Holdings must be provided, before each impacted income event, via SWIFT MT599 or CreationOnline free-format message (please refer to Announcement D18075 for full instruction formatting requirements) indicating the following:

  • ISIN;
  • Payment date;
  • Corporate action ID;
  • Customer’s Clearstream Banking account number;
  • Customer’s total holding;
  • Per country of residence and legal status of beneficial owner:
  • Fiscal country of residence;
  • Double Taxation Treaty (DTT), reference to exemption in tax code, Russian law details (article, paragraph, sub-paragraph);
  • Legal status (individual/legal entity);
  • Total holding;
  • Tax rate to apply;
  • Total holding that remains undisclosed.

The following information must in addition be provided for:

  • Beneficial owners claiming full tax exemption (0%), conditional rate (for example, French and Spanish residents), preferential treaty rate and transparent entities:
    • Name of the beneficial owner;
    • ISO code of fiscal country of residence;
    • Tax identification number (if applicable).
  • Russian residents:
    Customers instructing for Russian beneficiaries are requested to include in the ADTX field or in the additional text of the instruction a confirmation that the Russian beneficial owner has not been caught by any EU or US sanctions regarding Ukraine/Russia.

All these declared positions must be accurate on the relevant record date indicated in below table at 19:00 CET, meaning that no further transactions are allowed after the submission of the Breakdown of Holdings. If there is a discrepancy between the declared positions and the customer’s total holding visible in Clearstream Banking's books, the application for tax exemption will be rejected and, consequently, the maximum tax rate of 15% will be applied.

Furthermore, if Box 3 of the One-Time Certificate is ticked and we receive no Breakdown of Holdings by the prescribed deadline, the customer’s total holding will be considered as being undisclosed and, as a consequence, the maximum standard tax rate will be applied.

Additional documentation

The Russian authorities may audit disclosed shares for up to three years after a dividend payment.

Requests for further information may be expected to be made for supporting documentation, including but not limited to an original certificate of residency (COR) containing specific language regarding a DTT (if applicable) between the country of residence and Russia. These forms may also need to be apostilled. There is a 90-day period to provide audit documentation to the authorities with the possibility for 90-day extension. The Russian authorities reserve the right to request additional information/forms as they deem necessary.

Deadlines and fees

In order to benefit from a relief at source/quick refund from Russian DRs, customers must ensure that Clearstream Banking receives the above-described documents for the below-mentioned ISIN by the indicated deadlines:

ISIN

Name

Record Date

Relief at source deadline

Quick refund deadline

US8766292051

ADR PJSC TATNEFT REG (1ADR/6SHS)

30.12.2019

09.01.2020
10:00 CET

14.02.2020
10:00 CET

US7785291078ADR PJSC ROSTELECOM REG11.01.201914.01.2019
10:00 CET
15.02.2019
10:00 CET
US73181P1021ADR PJSC POLYUS REG10.10.201911.10.2019
10:00 CET
19.11.2019
10:00 CET
US80585Y3080ADR SBERBANK ROSSII REG (1DR/4SHS) 13.06.201914.06.2019
10:00 CET
17.07.2019
10:00 CET
US55315J1025ADR PJSC MMC NORILSK N REG (1ADR/0.1SHS) 

27.12.2019

07.01.2020
10:00 CET
12.02.2020
10:00 CET
US67011U2087GDR NOVOROSSIYSK CSPP REGS REG25.06.201926.06.2019
10:00 CET
29.07.2019
10:00 CET
US36829G1076ADR GAZPROM NEFT PJSC REG18.10.201923.10.2019
10:00 CET
29.11.2019
10:00 CET
US0373763087ADR MOSENERGO PJSC REG (1ADR/50SHS)02.07.201903.07.2019
10:00 CET
08.08.2019
10:00 CET
US7785291078ADR PJSC ROSTELECOM REG03.07.201905.07.2019
10:00 CET
07.08.2019
10:00 CET

US69343R1014

GDR PJSC AEROFLOT REG05.07.201908.07.2019
10:00 CET
07.08.2019
10:00 CET
US7821834048ADR RUSHYDRO PJSC REG (1ADR/100SHS)09.07.201910.07.2019
10:00 CET
15.08.2019
10:00 CET
US69343P1057ADR PSJC LUKOIL REG09.07.201910.07.2019
10:00 CET
12.08.2019
10:00 CET
US6074091090ADR MOBILE TEL PJSC REG (1ADR/2SHS)14.10.201916.10.2019
10:00 CET
22.11.2019
10:00 CET
US8688611057ADR SURGUTNEF PJSC REG18.07.201922.07.2019
10:00 CET
28.08.2019
10:00 CET
US8688612048ADR SURGUTNEF PJSC REG 1DR/10SHS18.07.201922.07.2019
10:00 CET
28.08.2019
10:00 CET
US3682872078ADR PJSC GAZPROM REG 1 ADR / 2 SHS  18.07.2019 19.07.2019
10:00 CET
27.08.2019
10:00 CET
US3133541025GDR FED GRID CO PJSC 144A REG16.07.2019  17.07.2019
10:00 CET
22.08.2019
10:00 CET

A depository service charge of USD 0.005 per ADR will apply for relief at source and for quick refund and potentially an external minimum service charge per beneficial owner of USD 25.00 may apply.

Relief at source / Quick refund tax rates

Standard rate (15%) for non-disclosed holders or for any disclosed holders of a non-DTT country or of a DTT country granting a 15% DTT rate.

Russian 13% for Russian residents.

DTT for residents of a DTT country.

Exempt 0%2 for Russian Unit Investment trusts, certain pension funds, supranational organisations recognised by the Russian legislation and sovereign/government entities.

Note: The standard refund process with the Russian Tax Authorities is extremely complex and time-consuming and this procedure will not be offered or supported by Clearstream Banking. As a consequence, we strongly suggest that customers apply for a relief at source/quick refund in order to obtain the reduced tax rates.

Customer's legal liabilities

By using the relief at source or quick refund service, the customer has obligations and liabilities as follows:

  • The customer will indemnify and hold Clearstream Banking harmless to any loss, liability or expense sustained by Clearstream Banking as a result of any act done in reliance upon the customer's certification or as a result of the inaccuracy of the information contained in the certification. The customer's liability under this indemnity includes, but is not limited to, reimbursement to the relevant tax authorities, issuer, paying agent, ADR depositary, or any other person or entity for under-withheld tax, or for the erroneous payment of a treaty benefit at source, for foreign exchange fees, for interest on under-withheld funds, and for administrative costs.
  • The customer will be obligated to supply to the source country's tax authority and the beneficial owner's home country tax authority which may be the U.S. Internal Revenue Service (IRS), or another appropriate authority, the supporting documentation.
  • Clearstream Banking will debit the customer's cash account for any debit of Clearstream Banking accounts made at DTC in response to the request of the relevant tax authorities, the paying agent, or ADR depositary for the amount of the tax relief received at source and related costs.
  • At the request of the relevant tax authorities, any customer that uses the tax relief or quick refund service but fails to comply with the procedures may be prohibited from using EDS service to obtain favourable rate for future distributions.

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1. This Announcement is published by Clearstream Banking AG (CBF), registered office at Mergenthalerallee 61, 65760 Eschborn, Germany, registered with the Commercial Register of the District Court in Frankfurt am Main, Germany, under number HRB 7500.
2. Subject to DR agent confirmation.