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

07.04.2021

Service offering

Relief at source is available to customers that are holding:

  • Own assets with either no AI status or holding own assets with AI status but not electing to assume the AI responsibility and liability for their own assets;
  • Own assets with AI status and electing to assume the AI responsibility and liability for their own assets; or
  • Third party assets having registered with the Finnish Tax Authority (FTA) and been approved as an AI and electing to assume AI responsibility and liability for their third party assets; and
  • For Clearstream Banking S.A. (CBL) customers: Are holding publicly listed Finnish equities, through Clearstream Banking’s account at Euroclear Finland (EFI), operated by Nordea Bank Abp; and
  • For Clearstream Banking AG (CBF) customers: Are holding publicly listed Finnish equities, though Clearstream Banking AG, via Clearstream Banking S.A’s account at Euroclear Finland (EFI), operated by Nordea Bank Abp.

Important note: Relief at source and quick refund is, at this stage, not offered to customers holding Finnish equities or ADR’s that are:

  • Unlisted;
  • Held in a collateral account held via Clearstream Banking (regardless of place of holding). Note: In the event of an upcoming dividend payment on a collateral account, such dividend will be substituted by Clearstream Banking, if possible. The only case where a dividend would be paid on a collateral account is in the event where there are no securities available to substitute.”; or
  • Held remotely, via other Clearstream Banking depositories.

Any tax certification received from customers for such accounts, for the purpose of obtaining relief at source or quick refund, will be rejected by Clearstream Banking.

Authorised and Contractual Intermediaries

Authorised intermediaries (AI)

By registering as an AI in Finland, the applicant undertakes certain responsibilities and liabilities towards the Finnish tax authorities (FTA) such as:

  • Endorsing due diligence in accordance with the FTA’s guidelines and requirements in order to identify the beneficial owner(s) and validate that such beneficial owner(s) for whom relief at source and or quick refund is requested is indeed eligible for it;
  • Being liable for withholding tax, if incorrect information is provided on beneficial owners;
  • Performing annual reporting directly to the FTA.

Note:

As per the FTA's  guidelines, beneficial owners, who have Authorised Intermediary status, may also elect to take the tax liability and responsibility for the dividends it receives from its own assets, provided such AI, notifies the upstream custodian (Clearstream Banking), that it will:

  • Take the responsibility and liability of its own dividends (where it is the dividend beneficiary); and
  • Undertake to report and include, in its own annual AI information return (TRACE reporting), its own beneficial owner information and related information on the dividend, which it received at the time of the dividend payment for its own assets.

Furthermore, if an AI has taken responsibility of its own dividends (the AI is the final dividend beneficiary), it cannot get released from liability (referred to in the Section 10c(2) of the Tax at Source Act) by proving that it has fulfilled its responsibilities to take reasonable measures and did not know or did not have reason to know that the dividend beneficiary provided incorrect and/or incomplete information, since it would be itself the dividend beneficiary.

Customers planning to become an AI are strongly recommended to seek advice from their own tax advisor to ensure they are fully aware of all their responsibilities and liabilities.

To apply for the AI status and subsequently be registered and publicly listed in the FTA’s online Register of Authorised Intermediaries, customers must make an application directly to the FTA. Clearstream Banking does not assist in this regard.

Further information regarding the application process, eligibility criteria and the AI’s responsibilities and liabilities can be found directly on the FTA’s website.

Contractual Intermediaries

Intermediaries that do not elect to become an AI are by default considered as a Contractual Intermediary (CI).

Eligible beneficial owners

The following beneficial owners are eligible to obtain relief at source from withholding tax on dividend payments on publicly listed Finnish equities:

Beneficial owner type

Tax rate

Non-treaty individuals (domestic law)

30%

Non-treaty corporations (domestic law)

20%

Residents of a double taxation treaty (DTT)

  • General treaty rate
  • Special articles of the DTT
  • Direct investment dividend according to the articles of the DTT

DTT rate

Tax exempt entities (domestic law)

  • equivalent to a corresponding Finnish entity exempt from tax;
  • Parent-Subsidiary Directive;
  • Other

0%

Documentation requirements

For the purpose of obtaining relief or exemption at source on behalf of eligible beneficial owners, qualified customers must submit to Clearstream Banking, before the relevant deadlines, the following documentation depending on their own status and the status of the underlying beneficial owners.

Customers holding their own assets with no AI status or that hold their own assets with AI status but not electing to assume the AI responsibility and liability for their own assets

  • One-Time Certificate publicly listed Finnish Equities – Own assets (OTC);
  • ISD-E form;
  • Tax-at-source card (if applicable);
  • Certificate of residence with reference to special articles (if applicable);
  • Per-payment beneficial owner declaration (if applicable);
  • Direct Investment confirmation (if applicable);
  • Parent-Subsidiary confirmation (if applicable).

Beneficial owner certification - Entities

DTT

Domestic law

Certification type

DTT-
general

DTT -
special articles

DTT-
direct investment

20% -
Non-DTT

0% - Comparable to Finnish exempt entity

0% -Parent Subsidiary Directive

0% - Other Domestic law

ISD-E

X

X

X

X

X

X

X

Tax-at-source card

    

X

X

X

Certificate of residence - with reference to articles of DTT

 

X

X

    

Per-payment beneficial owner declarationa

X

X

X

    

Parent-Subsidiary confirmation

     

X

 

Direct Investment confirmation

  

X

    

a. Only required for DTT rates below 15% and when the dividend gross amount, per dividend payment and per beneficial owner, is EUR 10.000,00 or above.

Customers holding own assets with AI status electing to assume the AI responsibility and liability for their own assets

  • One-Time Certificate publicly listed Finnish Equities – Own asset customer assuming AI responsibility and liability for their own assets.

Clearstream Banking customers that are holding third party assets and who have Authorised Intermediary (AI) status

  • One-Time Certificate Finnish publicly listed Equities – AI;
  • Per-payment pooled tax breakdown (if applicable).

TIN requirements

Customers are required to use the exact format, as stated in the COR, as applicable, whenever the Tax Identification Number (TIN) is required in the above Clearstream Banking documentation.

Deadlines

The deadlines for the submission of the documentation to obtain relief or exemption at source of withholding tax on dividends on publicly listed Finnish equities are as follows:

Document

Deadline for receipt by Clearstream Banking

One-Time Certificate publicly listed Finnish Equities (various versions)

Four business days prior to the record date of the first dividend payment by 10:00 CET.

Per-payment pooled tax breakdown

One business day after the record date of each relevant dividend payment by 10:00 CET.

ISD-E form

Four business days prior to the record date of the first dividend payment by 10:00 CET.

Certificate of Residence

Four business days prior to the record date of the first dividend payment by 10:00 CET.

Tax-at-source card

Four business days prior to the record date of the first dividend payment by 10:00 CET.

Per-payment beneficial owner declaration

One business day after the record date of each relevant dividend payment by 10:00 CET.

Direct Investment confirmation

Four business days prior to the record date of the first dividend payment by 10:00 CET.

Parent-Subsidiary confirmation

Four business days prior to the record date of the first dividend payment by 10:00 CET.