Icelandic tax-exempt debt securities - relief at source - rates, eligibility, documentation, deadlines etc.

05.02.2021

Withholding tax

Standard rate of withholding tax

0%

The standard rate of withholding tax on interest and redemption payments from non-taxable Icelandic debt securities, is the 0% non-resident rate in Clearstream Banking.

Eligible beneficial owners/recipients

Recipient types

Tax rate

Relief
at source

Quick
refund

Standard
refund

Non-resident beneficial owner

0%

n/a

n/a

n/a

Icelandic Banks complying with Article 3.2 of Act no. 94/1996

0%

n/a a

n/a

n/a

a. Customers that are Icelandic Banks complying with Article 3.2 of Act no. 94/1996 will automatically receive income payment with 0% non-resident withholding tax. Certification is therefore requested from such customers for reporting purposes to ensure such entities are reported as Icelandic recipients instead of non-residents.

Relief at source

Documentation requirements

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 the 0% non-resident withholding tax rate 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 OneTime Certificate for Icelandic Banks complying with Article 3.2 of Act no. 94/1996, which is valid until revoked.

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

Document

Deadline for receipt by
Clearstream Banking

One-Time Certificate for Icelandic Banks complying with Article 3.2 of Act no. 94/1996

10:00 CET, five business days before the first 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.

Customers are also reminded that it is at all times the customer's full responsibility to ensure that final beneficial owners are eligible for the tax rates applied (including the Clearstream Banking default rates), and that all information provided by customers for tax purposes is complete, accurate and up to date. Furthermore, customers shall hold Clearstream Banking harmless of any loss or liability incurred by Clearstream Banking as a result of a breach of this responsibility.

Capital gains tax

Standard rate of capital gains tax

0%

There is no capital gains tax withheld through Clearstream Banking on non-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.

Disclosure requirements

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 (RSK); 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.