Forms descriptions - Relief at source and quick refund - Russian debt securities

02.02.2021

Information is provided here about the forms and their use in relation to the procedure for relief at source and quick refund of withholding tax on interest from OFZ and municipal bonds Russian corporate bonds and mortgage-backed bonds.

For obtaining a relief at source or quick refund the following documentation is required:

One-Time Certificate for Russian Bonds

The One-Time Certificate must be submitted by all customers, regardless of the residency and status of the beneficial owners, before the first trade in Russian bonds or at the latest before the first impacted interest payment date and must state that the customer holds the securities, either:

  1. Standing instruction: Exclusively for one single beneficial owner (which may be the customer or his underlying client) eligible for reduced tax rates. By ticking the first box, a reduced tax rate is applied by default at source on all further income payments. The customer must, in order to comply with the reporting obligations, complete the beneficial owner’s data and the legal basis for tax relief and authorise CBL to forward these details together with the total holding to the Russian authorities (through the depository and agents) for each income paid to the customer’s account; or
  2. Standing instruction: On behalf of several beneficial owners (including the customer, when applicable) that have the same status (either legal entities or individuals), are residents in the same country and therefore are eligible for the same reduced tax rate. By ticking the second box, the applicable reduced rate of tax is applied by default at source on all further income payments. The customer must, in order to comply with the reporting obligations, complete the beneficial owners’ data and the legal basis for tax relief and authorise CBL to forward these details together with the total holding to the Russian authorities (through the depository and agents) for each income payment made to the customer’s account; or
  3. Instruction per payment: On behalf of several beneficial owners that:
  • are residents of different countries, and
  • may or may not be eligible to obtain reduced rates of withholding tax according to DTT or Russian legislation, or
  • are not willing to disclose their holdings and country of residence.

In addition to the One-Time Certificate, the customer is required to submit, before each income payment, a Breakdown of Holdings as explained below.

One-Time Certificates that have more than one box ticked are not valid and will be rejected.

How many are provided?

One per Clearstream Banking account(s).

Who completes it?

Customer.

How often is it provided?

Once. Valid until revoked.

When is it provided?

By the first applicable relief at source or quick refund deadlines.

Copy or original?

Original required.

Breakdown of Holdings

When 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 Xact Web Portal or CreationOnline free-format message indicating:

  • ISIN;
  • Payment date;
  • Customer’s CBL account number;
  • Customer’s total holding;
  • Per country of residence and legal status of eligible beneficial owner;
  • The country of residence;
  • DTT / Russian Tax Code applicability;
  • Legal Status (individual/legal entity);
  • Total holding;
  • Tax Rate to apply;
  • The total holding that remains undisclosed or not eligible to obtain reduced tax rate.

All these declared positions must be accurate on the relevant Record Date indicated in CBL’s tax notification, meaning that no further transactions are allowed after the submission of the Breakdown. If there is a discrepancy between the declared positions and the customer’s total holding visible in CBL’s books, the application for tax exemption will be rejected and, consequently, the maximum tax rate of 30% 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 tax rate will be applied.

How many are provided?

One per Clearstream Banking account.

Who completes it?

Customer.

How often is it provided?

Per each income payment.

When is it provided?

By each relief at source (at the latest on record date 16:00 CET) or quick refund deadlines.

Copy or original?

Via SWIFT MT599 or Xact Web Portal or CreationOnline free-format message.