Poland: Tax procedure for EUR denominated mortgage bonds
Effective
30 January 2017
Clearstream Banking1 will deposit EUR denominated mortgage bonds on its direct account at the Polish CSD KDPW. The account will continue to be operated by our agent on the Polish market Citi Handlowy.
Customers may refer to Announcement A17026, dated 26 January 2017, for further details on this direct link.
As a consequence of this change, the tax procedure applicable to these EUR denominated mortgage bonds has been reviewed and agreed with the Polish CSD KDPW.
Background
A 20% default withholding tax rate applies to interests and redemptions distributed by EUR denominated mortgage bonds.
Since 1 January 2016, the following final beneficial owners are eligible for tax exemption at source, or via the quick refund or standard refund procedures, after submission of the required tax certification by the prescribed deadlines:
- Legal entities not resident of Poland;
- Individuals not resident of Poland;
- Legal entities resident of Poland (such beneficial owners are under the obligation to declare their income and pay their tax directly to the Polish Tax Authorities (PTA)).
Individuals resident of Poland may apply to obtain the 19% tax rate.
Impact on customers
As of 30 January 2017, the following tax procedure will apply to EUR denominated mortgage bonds deposited with KDPW.
Note: There is no change to the procedure applicable to other types of mortgage bonds.
Relief at source procedure
Customers wishing to obtain full exemption at source will have to provide Clearstream Banking with the following documentation (available on our Tax Forms to use - Poland page) by the prescribed deadline:
For all beneficial owners regardless their residency and status:
One-Time Certificate for Polish withholding tax purposes
The original, completed and duly signed by the customer and specifying, among other things, whether or not the customer is the sole beneficial owner of all the polish securities held in the account, must be provided once before the first income/payment; it remains valid until revoked. Any changes must be communicated in a new One-Time Certificate.
For all non-resident legal entities and individuals (0%):
- A List of Beneficial Owners (LBO)
The LBO indicates the complete data of each beneficial owner, the applicable withholding tax rate, the common code or ISIN, the nominal amount or number of securities and the tax rate to be applied; it must be provided before each interest payment. - A Certificate of Residence (COR)
An original COR must be issued by the beneficial owner’s local tax authorities in the year for which it is to be used. It must include the beneficial owner’s full name and address. It must be provided before the first interest payment and it remains valid for 12 months from the date of issuance, unless a validity period is mentioned.
Note: CORs that have been provided in the past to our custodian Bank Handlowy and which validity has not expired cannot be used for the certification of EUR denominated mortgage bonds deposited with KDPW as both entities must be in possession of original documents. In that case, new original CORs must be provided
Important note: Non-resident individual beneficial owners providing only the LBO may obtain a reduced tax rate of 19% those beneficial owners must provide in the LBO the the purchase price (for redemption payments).
For resident legal entities (0%):
- A list of Beneficial Owners (LBO)
The LBO indicates the complete data of each beneficial owner, the applicable withholding tax rate, the common code or ISIN, the nominal amount or number of securities and the tax rate to be applied; it must be provided before each interest payment.
For resident individuals (19%)
- A list of Beneficial Owners (LBO)
The LBO indicates the complete data of each beneficial owner, the applicable withholding tax rate, the common code or ISIN, the nominal amount or number of securities, the purchase price (for redemption payments ) and the tax rate to be applied; it must be provided before each interest payment. - A Power of Attorney (POA) - Purchase price (Annex C)
Only required for redemption payments. The POA, will allow Clearstream Banking to provide the beneficial owner details, and specifically the purchase price, indicated in the LBO to KDPW. The purchase price will be used for the calculation of the tax on redemption payment based on the discounted amount. Failing to provide the POA will result in the calculation of the tax on the full redemption amount. It must be duly notarised and apostiled in the beneficial owner’s country of residence and must be provided before the redemption payment.
Deadline for relief at source
LBO: Must be received by Clearstream Banking at the latest by the payment record date, by 10:00 CET.
Certificates: Must be received by Clearstream Banking at the latest four business days prior to payment record date, by 10:00 CET.
Quick refund procedure
Quick refund is offered only for redemptions. The documentation requirements are the same as for relief at source.
Deadline for quick refund
LBO: Must be received by Clearstream Banking at the latest one business day prior to the last business day of the month, by 10:00 CET.
Certificates: Must be received by Clearstream Banking at the latest four business days prior to the last business day of the month, by 10:00 CET.
Standard refund procedure
Customers wishing to obtain standard refund will have to provide Clearstream Banking with the following documentation (available on our Tax Forms to use - Poland page) by the prescribed deadline:
- A Certificate of Residence
An original COR must be issued by the beneficial owner’s local tax authorities in the year for which it is to be used. It must include the beneficial owner’s full name and address and it remains valid for 12 months from the date of issuance, unless a validity period is mentioned.
Note: CORs that have been provided in the past to our custodian Bank Handlowy and which are still valid cannot be used for the certification of EUR denominated mortgage bonds deposited with KDPW as both entities must be in possession of original documents. - A Power of Attorney from beneficial owner to Bank Handlowy (Annex D)
A POA completed and signed by the final beneficial owner and duly notarised and apostiled in the beneficial owner’s country of residence must be provided in order to authorise Bank Handlowy to reclaim withholding tax on customer's behalf. It must be submitted once and remains valid until revoked. - A declaration of not being engaged in a commercial activity
The Declaration of not being engaged in a commercial activity in Poland must be provided duly notarised and apostiled in the beneficial owner’s country of residence. It must be submitted once and remains valid for the one or more years that are completed in the form. - A credit advice/proof of final distribution
Identifies income payment details including the following: Name and address of the beneficial owner, Account, Pay Date, ISIN/Securities name, Holding, Gross amount of payment, amount of tax withheld and Net amount. It is required from each intermediary financial institution between the beneficial owner and Clearstream Banking. The Credit Advice must reconcile with the information in the Letter of Request for Reclaim. - A letter of request for reclaim
The Letter of Request to Clearstream Banking for Reclaim of Polish Withholding Tax authorises Clearstream to process the reclaim with the PTA on the customer’s behalf. It must be completed and duly signed by the customer, for each reclaim application.
Deadlines for standard refund
The statutory deadline is five years from the end of the calendar year in which the relevant withholding tax was paid.
The deadline by which Clearstream Banking must receive the documentation for an application is at the latest two months before the statutory deadline. All reclaim 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 do not reach the PTA by the date considered to be the statute of limitations deadline.
Further information
For further information, customers may contact Clearstream Banking1 Client Services or their Relationship Officer.
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1. Clearstream Banking refers collectively to 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, and Clearstream Banking AG (for CBF customers using CreationOnline), registered office at 61, Mergenthalerallee, 65760 Eschborn, Germany and registered in Register B of the Amtsgericht Frankfurt am Main, Germany under number HRB 7500.