France: Updated tax procedure for foreign Collective Investment Vehicles (CIVs) - revision

Note: This announcement, originally published on 4 April 2018 and updated on 30 April 2018 and 16 June 2018, has been further updated to reflect new documentation requirements from the French Tax Authorities in the event of a refund. The procedure has already been updated in the Market Taxation Guide.

Following Announcement A17174 and D17073 and effective

9 April 2018

Clearstream Banking S.A.¹ (CBL) will deposit and settle French T2S eligible assets with Clearstream Banking AG ² (CBF) in order to enable future OneClearstream service upgrades (the “Migration Date”).

This will harmonise and enhance the tax process offered to our customers. Clearstream Banking³ will introduce a simplified procedure, a quick refund and a standard refund for  foreign CIVs.

Important note: The procedure below is not applicable to securities still deposited with BNP Paribas Securities Services.

Background

Until 9 April 2018, foreign CIVs could obtain full tax exemption (or 15% in case of dividend distribution by a SIIC or a SPPICAV) only through a relief at source procedure which is the usual process applicable to exemptions determined by the French domestic law.

As previously announced in A17063, a simplified procedure for foreign CIVs was introduced by the French Tax Authorities (FTA) on 1 March 2017 but could not be offered by CBL as it was not available from our local depository, BNP Paribas Securities Services.

In addition, no process of refund was available through Clearstream Banking. The only possibility for foreign CIVs to obtain a refund of French-sourced dividend withholding tax was to use the “Contentieux” tax reclaim process.

Clearstream Banking have recently obtained the agreement of the FTA to offer a quick refund and a standard refund service to foreign CIVs eligible for tax relief.

Impact on customers

Eligible foreign CIVs wishing to obtain exemption through the simplified procedure, quick refund or standard refund should follow the process below:

Relief at source - simplified procedure

On condition that the required certification, beneficial owner information and breakdowns are provided, this simplified procedure allows for dividend payments to be made directly at 100% or 85% (if a distribution by a SIIC or SPPICAV) to beneficial owners that are:

UCITS IV: UCITS established in a European Union Member State and governed by Directive 2009/65/CE of 13 July 2009 (the “UCITS IV” directive);

Certain alternative investment funds (AIFs) established in a European Union or European Economic Area Member State and governed by Directive 2011/61/UE of 8 June 2011 (the “AIFM” directive).

Documentation requirements

One-Time Certificate for French securities (OTC) – valid until revoked: One-time certification that provides information regarding the customer of Clearstream Banking, stating that they hold French equities on behalf of one or more beneficial owners that are entitled to apply for relief at source through the simplified procedure. This OTC gives the possibility to apply for a standing instruction:

• If the customer holds the securities for itself or for a single beneficial owner (first box), or
• If the customer segregates its holdings per tax rate (second box).

RPPM (revenus et profits du patrimoine mobilier) forms – valid until revoked : The Form RPPM is a self-declaration containing the CIV information and must be signed by the CIV or its managing company, per fund or sub-fund.

As a general rule,

• Boxes I and II must be fully completed by the CIV or its managing company.
• Box III must contain date, place, signature and stamp.
• The table must be updated with the requested details according to the status of the CIV. When a category in column 3 is ticked the related details must be completed in column 4.

Corporate Action instruction – per payment: Tax breakdown instruction that must be sent only by customers having no standing instruction in place (OTC Box III) either via Xact Web Portal, CreationOnline (CBL and CBF 6-series account customers only) or by a formatted SWIFT MT565 message and must include the following details:

• Account number of the customer;
• ISIN code;
• Payment date;
• A breakdown of the position with the nominal amounts and respective tax rate to apply. 

Per-payment Detailed List of Beneficial Owners - per payment: List of beneficial owners that obtained relief at source and having a standing instruction per tax rate only (OTC box II) or no standing instruction (OTC Box III). The list has to be uploaded through Clearstream Banking's online Upload BO List facility, using the provided template.

Deadlines for receipt of documentation

Documentation for relief at source from withholding tax on dividends from French equities through the simplified procedure must be received by Clearstream Banking by the following deadlines:

Quick refund

Foreign CIVs that did not meet the relief at source deadlines may obtain a quick refund as follows:

Documentation requirements

The documentation requirements are the same as for relief at source.

Deadlines for receipt of documentation

The certification deadline is the same as for relief at source except for the corporate action instruction:

Standard refund

A standard refund of withholding tax on dividends from French equities is available to eligible foreign CIVs if relief at source has not been obtained, as follows:

Documentation requirements

In order to obtain a standard refund of withholding tax, eligible foreign CIVs must provide Clearstream Banking with the following documentation within the prescribed deadline:

• A Letter of Request to Clearstream Banking for Reclaim of French Withholding Tax
• An attestation of comparability of the foreign CIV with a French CIV. The type of attestation differs according to the status of the foreign CIV:
  • For UCITs IV: A UCIT attestation delivered by the competent local authorities or a copy of the prospectus;
  • For AIFs: A completed RPPM form and a copy of the prospectus.
• A power of attorney, if RPPM not signed by the beneficial owner
• A form 5001 Calculation and Repayment of Withholding Tax on Dividends (page two only)

Clearstream deadline for standard refund applications

The deadline by which Clearstream Banking must receive the documentation for an application is at the latest two months before the statutory deadline for reclaiming withholding tax which is two years after the end of the calendar year in which the dividend payment is made. 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 have not reached the FTA by the date considered to be the statute of limitations deadline.

When are refunds received

The tax will be refunded only upon validation by the FTA. As this service is new, we cannot assess the estimated time by which the FTA will authorise Clearstream Banking to pay the refund. We recommend that customers use the relief at source procedure that offers more certainty.

Disclaimer on tax refunds

This procedure is based on confirmation received by Clearstream Banking from the FTA and may be subject to changes if additional or amended information is received from the FTA.

Clearstream Banking cannot be held responsible in case of rejection by the FTA.

Further information

For further information about the withholding tax procedures for French equities, please refer to the Clearstream Banking Market Taxation Guide - France.

Customers may contact the Clearstream Banking Tax Help Desk or Clearstream Banking Client Services or your Relationship Officer.

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1. Clearstream Banking S.A. (CBL) registered office at 42, avenue John F. Kennedy, L-1855 Luxembourg, and registered with the Luxembourg Trade and Companies Register under number B-9248.

2. Clearstream Banking AG (CBF), registered office at Mergenthalerallee 61, 65760 Eschborn, Germany, registered with the Commercial Register of the District Court in Frankfurt am Main, Germany, under number HRB 7500.

3. In this document, Clearstream Banking refers to both CBL and CBF.