Relief at source - eligibility, documentation, deadlines - Irish equities

25.07.2019

Pre-requisites for obtaining tax relief at source on Irish domestic equities

To allow CBL to apply tax relief at source, customers must open a segregated account on which they will hold exclusively positions eligible for tax exemption and that are duly certified. The required certification described below has to be received by Clearstream Banking before the transfer of the securities in this exempt account. After the receipt and validation of the certification, the customer account will be flagged X (exempt) and all dividends from Irish domestic equities will be paid gross.

Who can obtain relief at source?

Relief at source from withholding tax on dividends from Irish equities is available through Clearstream Banking for beneficial owners and QI customers as follows:

Eligible beneficial owners and customers

Rate applicable at source

Qualified Intermediaries (QI)

0%

Qualifying non-residents

0%

Excluded Irish persons

0%

To apply for tax relief at source, the direct customer of Clearstream Banking must:

  • be the beneficial owner of the Irish equities and qualify as non-resident person or as excluded Irish person; OR
  • be authorised as Qualifying Intermediary (QI) by the Irish Revenue Commissioners and holds Irish equities on behalf of qualifying non-resident persons or excluded Irish persons, or on behalf of an underlying intermediary also authorised as QI and holding Irish equities on behalf of qualifying non-resident persons or excluded Irish persons.

The following main categories of beneficiaries are considered as being qualifying non-resident persons:

  • an individual or an unincorporated entity which is neither resident nor ordinarily resident in Ireland, but resident in another EU Member State or in a Double Taxation Treaty (DTT) country for tax purposes;
  • a company resident in another EU Member State or in a DTT country that is not controlled, either directly or indirectly, by Irish residents;
  • a company (not resident in Ireland) ultimately controlled by residents of another EU Member State or of a DTT country;
  • a company of which the principal class of shares (either belonging to a 75% parent, or to two or more companies by which the company is wholly-owned) is substantially and regularly traded on a recognised stock exchange in another EU Member State or in a DTT country, or on such other exchange as may be approved of by the Minister of Finance;
  • companies that are wholly owned by two or more companies, each of whose principal class of shares are substantially and regularly traded on one or more recognised stock exchanges in a relevant territory.

The following main categories of beneficiaries are considered as being excluded Irish persons:

  • an Irish resident company;
  • a pension scheme;
  • manager of approved retirement funds, approved minimum retirement funds and special savings incentive accounts;
  • a qualifying employee share (ownership) trust;
  • a collective investment undertaking;
  • a charity;
  • a sports body that has been granted exemption from tax by The Revenue;
  • a designated stockbroker who is receiving relevant distributions as part of the income of a special portfolio investment account;
  • a qualifying fund manager who is receiving relevant distributions as income arising in respect of assets held in an approved retirement fund (ARF);
  • Irish Exempt Unit trusts;
  • Irish Person Retirement Savings Account administrators;
  • certain other persons resident in Ireland.

The complete lists and further details are available on The DWT Technical Guidance Notes.

Documentation requirements

There are different documentation requirements depending on the status and residency of the beneficial owner.

In order to flag their dedicated account as tax exempt and consequently obtain gross payments on dividends from Irish domestic equities, customers must provide the following certification before the transfer of the impacted positions on the respective account:

One-time certificate for tax exemption on Irish domestic equities certifying that the Clearstream Banking direct customer:

  • has been authorised as Qualifying Intermediary (QI) by the Irish Revenue Commissioners and holds Irish equities on behalf of a qualifying non-resident person or an excluded Irish person, or;
  • is the beneficial owner of the Irish equities and is a qualifying non-resident person or an excluded Irish person.

CBL customer is a Qualifying Intermediary (QI)

A copy of the document, delivered by the Irish Revenue Commissioners, proving the QI status.

Important note: Customers are responsible to ensure that for each final beneficiary applying for tax exemption, valid Irish DWT forms are in the possession of the QI having the positions of the final beneficiary in its books. These forms must be provided upon request of the Irish authorities. Furthermore, the Irish tax authorities maintain the right to request additional information or forms at any time. Customers being QI in Ireland and beneficial holders are responsible and liable for any tax relief, penalties, and for maintenance and provision of all materials supporting the tax exemption.

CBL customer is the final beneficial owner and eligible for tax exemption

Depending on its status and residency, one of the following certificates must be provided together with the One-time certificate for tax exemption on Irish domestic equities.

For excluded Irish persons:

or

or

For qualifying non-resident persons:

or

or

For qualifying non-resident persons, the declaration must, where appropriate be supported by documentary evidence. The supporting documentation is as follows:

  • A declaration made by a non-resident person (not being a company) must be accompanied by a certificate of residence from the tax authority in the country of the person’s residence.
  • A declaration by the trustee or trustees of a non-resident discretionary trust must be accompanied by:
    • a certificate given by the tax authority of the country in which the trust is, by virtue of the law of that territory, resident for the purposes of tax, certifying that the trust is resident in that territory;
    • a certificate from the trustee or trustees showing the names and addresses of the settlers and beneficiaries of the trust; and
    • a certificate from Revenue indicating that they have seen the certification and have noted its contents.

Validity of the documents

Certificate

Validity

One-time certificate for tax exemption on Irish domestic equities

Valid until revoked.

Proof of Qualifying Intermediary (QI) status

Valid until revoked.

Forms for Qualifying non-resident persons

Valid from the date of issue until 31 December in the fifth year following the year in which the certificate was issued.

Certificate of residence

Valid from the date of issue until 31 December in the fifth year following the year in which the certificate was issued.

Forms for resident (excluded) persons

Valid until the excluded person notifies CBL as QI that they have ceased to be an excluded person.

Deadlines for receipt of documents

The required certification must be received by Clearstream Banking before the transfer of the securities in the dedicated segregated account on which the client will hold exclusively positions eligible for tax exemption. After the receipt and validation of the certification, the customer account will be flagged X (exempt) and all dividends from Irish domestic equities will be paid gross. For the document with a end of validity, a renewal of certificate will have to be provided before the end of validity of the impacted document.

Certificate

Deadline for receipt of documents

One-time certificate for tax exemption on Irish domestic equities

Before execution of the first trade in Irish equities to be settled in Clearstream Banking.

Proof of Qualifying Intermediary (QI) status

Before execution of the first trade in Irish equities to be settled in Clearstream Banking.

Forms for Qualifying non-resident persons

Before execution of the first trade in Irish equities to be settled in Clearstream Banking.

Certificate of residence

Before execution of the first trade in Irish equities to be settled in Clearstream Banking.

Forms for resident (excluded) persons

Before execution of the first trade in Irish equities to be settled in Clearstream Banking.