Czech Republic: Shorter statutory deadline for specific issuers for standard refunds

The statutory deadline for a standard refund 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.

Background

Clearstream Banking¹ has been recently informed by its local depository that for dividends paid for ISIN CZ0009093209 (issuer O2) the deadline to reclaim the tax over withheld at source has been reduced to 60 days. Clearstream Banking received the following clarification:

In the Czech Republic, the refund applications must be filed by the final beneficial owner through the respective issuer, regardless if the application is done via the quick refund or the standard refund. For a standard refund, the issuer can then use either the statutory deadline of three years after the year when the payment took place, or a 60 day period of limitation that is covered in the Czech Tax Code, Article 237 of the Act nr. 280/2009. According to this Article, if the receiver of the income has any doubts or questions related to the tax withheld, a request can be sent to the institution withholding the tax (the issuer) within 60 days from the payment. If this deadline is met, the issuer has a 30 day period to answer/process the request. As explained above, the Central Specialized Tax Office (responsible for O2 payments) does not accept refund applications filed by the final beneficial owners or their representatives and considers the issuer (that is the entity collecting the tax from the underlying investors and paying it to the Tax Authorities) as being the tax payer. Consequently, the issuer is the only entity entitled to file the standard reclaim applications with the Central Specialized Tax Office and claim the refunds on behalf of the final beneficial owner.

The issuer O2 decided to reduce their administration associated to the dividend payments and to apply the 60 day deadline, which represents a deviation from standard market procedures, but remains compliant with the local legislation, as per the above explanation.

This approach creates a precedent in the market and there is no guarantee that other issuers will follow it in the future. If a similar situation occurs, we will inform customers via the SWIFT tax notification sent before each impacted income event.

Impact on customers

Customers wanting to reclaim the tax withheld at source on behalf of final beneficial owners must file their application within the 60 day deadline. If this deadline is missed, there is no further possibility of a standard refund.

Important note: In relation to CZ0009093209, special templates are requested by the issuer for the declarations to be completed and signed by the final beneficial owners. They are available upon request via our Tax Helpdesk team (see contact details ). To reclaim the tax withheld on Pay Date 26 November 2014, customers must provide the documentation for a standard refund at the latest by 10:00CET on 7 January 2015. A SWIFT tax notification will be sent shortly to all customers holding such securities with Clearstream Banking to explain in further detail the refund procedure to be followed.

Further information

For further information, customers may contact the Clearstream Banking Tax Help Desk.

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.