Irish ORDs: Interruption of tax relief at source and quick refund service through Clearstream Banking

 Effective,

immediately

relief at source or quick refund of withholding tax is no longer available through Clearstream Banking¹ on Irish ordinary shares deposited with DTCC (ORDs).

Background

Globe Tax, the appointed agent for ORDs that are eligible for Elective Dividend Service (EDS) election, has just announced that the Office of the Irish Revenue Commissioners (the Revenue) clarified and advised that, in order to apply a reduced tax rate at source or through the quick refund, all institutions acting as intermediaries between the DTCC and the final beneficial owner must either be domiciled in the United States or recognised as an Irish Qualified Intermediary according to the Irish law provisions.

Globe Tax has advised that support for the above can be found in the Revenue’s DTW Technical Guidance Notes, specifically Section 8.5 (Description of Certification) and Section 9 (American Depositary Receipts (ADRs)). 

Clearstream Banking has been informed by its U.S. custodian that, due to the above conditions to apply for DTCC EDS on Irish ORDs not being fulfilled, any instructions received for tax relief are rejected.

Impact on customers

Beneficial owners holding Irish ORDs eligible for EDS election through Clearstream Banking (that is a foreign (non-U.S.) intermediary that is not an Irish Qualified Intermediary as defined under Irish law) has, as a result become ineligible to obtain Irish treaty relief via EDS.

Consequently, the tax notifications sent before these events and explaining the tax process for relief at source, will no longer be distributed to customers.

Investors eligible for treaty benefits may reclaim the tax withheld at source by applying for a standard refund with the Revenue.

Clearstream Banking continues to analyse this unexpected interpretation of the legal requirements that oblige us to limit the tax service on Irish ORDs to standard refund only and work closely with our custodian to find a solution to re-establish the service.

Further information

For further information, please contact the Clearstream Banking Tax Help Desk or Clearstream Banking Client Services or your 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 Clearstream Banking AG customers using Creation Accounts), registered office at 61, Mergenthalerallee, 65760 Eschborn, Germany and registered in Register B of the Amtsgericht Frankfurt am Main, Germany under number HRB 7500.