Czech Republic: New procedure for International and Supranational organisations

Effective

immediately

Clearstream Banking’s¹ depository, UniCredit Bank Czech Republic and Slovakia, a.s., confirmed that exemption of withholding tax is now available to International and Supranational organisations through the relief at source and refund procedures upon submission of the required certification within the prescribed deadlines, as described below:

Relief at source and quick refund

Documentation requirements

The documentation requirements are the same for relief at source and quick refund:

A One-Time Certificate for Czech Republic Withholding Tax Purposes regarding Debt Securities and Equities held in Clearstream Banking - The original, completed and duly signed by the customer and specifying, among other things, that the customer is an International/Supranational organisation and whether or not the customer is the sole beneficial owner of all the Czech securities held in the account, must be provided once before the first interest/dividend payment and remains valid until revoked. Any changes to any details must be communicated in a new One-Time Certificate.

And

A Declaration of Beneficial Ownership for International and Supranational organisations - A one-time declaration per beneficial owner that holds Czech securities in Clearstream Banking. The same certificate is valid for all interest and dividend payments. When applicable, it must be clearly stated in the Declaration of Beneficial Ownership that the customer or third party was appointed as the beneficial owner’s attorney-in-law with authority to complete and sign the declaration on the beneficial owner’s behalf.

And

A proof that the customer requesting exemption is an International/Supranational organisation - The proof can be:
- A certification from the tax authorities confirming that the entity is an International/Supranational organisation eligible for tax exemption; or
- The international treaty, the foundation document or any other document proving that the entity is an International/Supranational organisation eligible for tax exemption exempt from tax.

And

A Power of Attorney – Only needed if the customer or third party is completing the Declaration of Beneficial Ownership on behalf of the beneficial owner.

And

A List of Beneficial Owners – Only needed when the customer is not the sole beneficial owner of the securities (box 2 of the OTC). It must be completed by the customer, submitted via Clearstream Banking’s BO Upload facility. Hard copies are accepted on exceptional basis if they include all the data from the uploaded template.

All tax certificates (except the List of Beneficial Owners) must be submitted under the letterhead or with the stamp of the signatory entity.

Deadlines

Relief at source

In order to benefit from relief at source on income from Czech securities, customers need to ensure that we receive the tax documents by the following deadlines:

Original certificates: At the latest nine business days before the respective income payment date by 10:00 CET.

List of Beneficial Owners: At the latest seven business days before the respective income payment date by 10:00 CET.

Quick refund

Documentation must be received by Clearstream Banking by the following deadlines:

Interest payments: At the latest by 10:00 CET on the 13th calendar day of the month following the month in which the income was paid (or, if the 13th of the month is not a business day, the last business day before that).
Dividend payments: At the latest by 10:00 CET on the 13th business day after the respective payment date.

These deadlines may be subject to change at the decision of the issuer and, in such cases, customers will be informed accordingly.

Note: Clearstream Banking can give no guarantees with regard to the quick refund procedure as it is based on market practice and all applications depend on the good will of the paying agent. Although Clearstream Banking will assist customers with quick refund applications, it can only remit to customers' accounts the amounts that it receives.

Standard refund

Beneficial owners that are International/Supranational organisations and did not apply for relief at source or quick refund may recover the tax withheld at source via standard refund.

Note: Although the standard refund procedure is covered by the Tax Act, the procedure to be followed has not been yet defined by the Czech Tax Authorities. Therefore, it should be noted that Clearstream Banking would urge its customers to try to apply for the relief at source procedure and to avoid having to apply for a standard refund.

Documentation requirements

A Declaration of Beneficial Ownership for International and Supranational organisations - A one-time declaration per beneficial owner that holds Czech securities in Clearstream Banking. The same certificate is valid for all interest and dividend payments. When applicable, it must be clearly stated in the Declaration of Beneficial Ownership that the customer or third party was appointed as the beneficial owner’s attorney-in-law with authority to complete and sign the declaration on the beneficial owner’s behalf.

And

A proof that the customer requesting exemption is an International/Supranational organisation - The proof can be:
- A certification from the tax authorities confirming that the entity is an International/Supranational organisation eligible for tax exemption; or
- The international treaty, the foundation document or any other document proving that the entity is an International/Supranational organisation eligible for tax exemption exempt from tax.

And

A Power of Attorney – Only needed if the customer or third party is completing the Declaration of Beneficial Ownership on behalf of the beneficial owner.

And

A Credit Advice - Identifies income payment details, including the security type, gross amount of payment, date of payment and amount of tax withheld. The Credit Advice must reconcile with the information in the Declaration of Beneficial Ownership and the Letter of Request to Clearstream Banking for Reclaim of Czech Withholding Tax.

And

A Letter of Request to Clearstream Banking for Reclaim of Czech Withholding Tax - Authorises Clearstream Banking to reclaim withholding tax from the Czech Tax Authorities on the customer's behalf.

All tax certificates (except the, proof of exemption issued by the Tax Authorities) must be submitted under the letterhead or with the stamp of the signatory entity.

Deadline for standard refund

The statutory deadline for reclaiming withholding tax using the standard refund procedure is three years after the year in which the respective income payment was made.

Important note:

The statutory deadline may be reduced from three years to 60 days, depending on the issuer collecting the tax from the underlying investors and paying it to the Czech Tax Office (refer to A14163 for further details).

The deadline by which Clearstream Banking must receive the documentation for a standard refund application is, at the latest, two months before the statutory deadline. All standard refund applications received after this deadline will be processed by Clearstream Banking on a “best efforts” basis. However, in such cases, Clearstream Banking will apply an extra charge and accepts no responsibility for forms that have not reached the Czech Tax Authorities by the date considered as being the statute of limitations deadline.

With respect to tax reclaims in general, customers are reminded that Clearstream Banking accepts no responsibility for their acceptance or non-acceptance by the tax authorities of the respective country. It is the customer's responsibility to determine any entitlement to a refund of tax withheld, to complete the forms required correctly and to calculate the amount due.

Further information

For further information, customers may contact Client Services or their Relationship Officer.

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1. Clearstream Banking refers collectively to Clearstream Banking AG, registered office at 61, Mergenthalerallee, 65760 Eschborn, Germany and registered in Register B of the Amtsgericht Frankfurt am Main, Germany under number HRB 7500, and Clearstream Banking S.A., registered office at 42, avenue John F. Kennedy, L-1855 Luxembourg, and registered with the Luxembourg Trade and Companies Register under number B-9248.