Japanese American Depositary Receipts (ADRs) - rates, eligibility, availability of relief etc.
|Standard rate of withholding tax:||15.315%||Holding requirements / restrictions:||No|
The standard rate of withholding tax on dividends from Japanese American Depositary Receipts (ADRs) is 15.315% in Clearstream Banking.
Residents of Japan are subject to withholding tax on dividends from Japanese ADRs as follows:
- Individuals are subject to 20.315%.
- Corporations are subject to 15.315%.
- Foreign and Japanese individuals holding 3% or more of the outstanding shares are subject to 20.42%.
It is the responsibility of the customer to ensure that final beneficial owners are eligible for the tax rates applied for, including the Clearstream Banking default rate. Neither Clearstream Banking nor its local depository has any direct or indirect liability towards the Japanese authorities in this regard (please refer to documentation requirements below for Japanese residents that are individuals and for investors holding 3% or more of the outstanding shares).
Availability of relief
The following types of beneficial owner can, provided that the appropriate documentation is submitted to Clearstream Banking, obtain relief at source or exemption from withholding tax on dividends from Japanese ADRs:
- Residents of Double Taxation Treaty (DTT) countries; and
- Tax-exempt entities (such as international or supranational organisations).
A standard refund of withholding tax on dividends from Japanese ADRs is not available through Clearstream Banking.
Relief at source
Relief at source or exemption from withholding tax on dividends from Japanese ADRs is available through Clearstream Banking for eligible beneficial owners as follows:
- For residents of DTT countries, the applicable rate is the tax treaty rate or 15.315%, whichever is lower.
- For tax-exempt entities (such as international or supranational organisations), the applicable rate is 0%.
To obtain relief at source or exemption from withholding tax on income from Japanese ADRs, the documentation must be provided to Clearstream Banking before the respective dividend payment date (see “Deadlines for receipt of documents” below).
The documentation requirements vary according to the status of the beneficial owner, as follows.
For all types of beneficial owner :
- One-Time Certificate for Japanese ADRs, signed and completed by the customer and valid until revoked. The original must be sent to:
Clearstream Operations Prague s.r.o.
Attn: PTS - Tax Services
Futurama Business Park Building B
CZ-18600 Prague 8
- Per-payment Breakdown, submitted via Xact Web Portal, CreationOnline or SWIFT message, including the following information:
- Customer account number;
- Corp ID;
- Payment date;
- A breakdown of the position with the quantity (please refer to the eligible balance on the account) and respective tax rate to apply per each beneficial owner;
- Name, address and country of residence of each beneficial owner (this information must be included in the BENODET sequence for SWIFT users or beneficial owner sequence for CreationOnline users);
- Tax Identification number (TIN) (For U.S. residents, only) ;
- Full contact details of the customer.
- Please send one Per-payment Breakdown per each tax rate required.
- Customers are required to specify the applicable tax rate requested in field :92A:: (SWIFT) or in the withholding tax rate sequence (CreationOnline).
Customers must provide the following additional documentation upon request:
- Proof of tax residence for beneficial owners that are eligible to obtain relief at source or exemption from withholding tax, either via a Certificate of Residence issued by the beneficial owner’s local tax authorities or via U.S. Internal Revenue Service (IRS) Form W-8BEN/W-9;
- Appendix A; and
- Any other tax documentation requested from time to time.
Note: All proof of residence must be signed, stamped and dated before the first dividend payment date to which it applies and, furthermore:
- The Certificate of Residence must be issued within nine months and in the same year of the dividend payment and, in cases of an exempt pension fund, must show the exempt status of the pension fund.
- The IRS Form W-8BEN must be dated within three years of the payment.
- The IRS Form W9 may not contain a PO Box address and must include the U.S. TIN of the beneficial owner.
Deadline for receipt of documents
The deadline for the receipt by Clearstream Banking of the documentation to obtain exemption or relief at source from withholding tax on income from Japanese ADRs will be communicated on a per-payment basis via the Clearstream Banking tax notification.