Foreign Shares in collective safe custody: Disclosure of names for dividend payments subject to reduced South Korean taxation rate - update
Note: This announcement originally published on 24 September 2019 was updated to provide the correct South Korea Beneficial Owner List.
Clearstream Banking1 informs customers that for Samsung Global Depository Receipts (GDRs) with ISINs US7960502018 and US7960508882 a taxable dividend payment was declared. The following documents must be submitted to Clearstream Banking no later than
7 October 2019, 10:00 CET
Due to the different taxation treatment of dividend income for the above-listed securities kept in collective safe custody, the below-described documents must be submitted to Clearstream Banking as per record date 30 September 2019 to obtain a reduced tax rate or exemption from South Korean withholding tax.
Customers should note that failure to submit the documents by the above-mentioned date results in the dividend being paid with a tax deduction of 22%, that is, the standard rate of South Korean withholding tax.
How to instruct
Electronic instruction
Customers must provide Clearstream Banking with an electronic instruction via Xact Web Portal, CreationOnline, SWIFT MT565, MT568 or MT599. One electronic instruction must be submitted per tax rate.
The electronic instruction must include:
- Corporate Action ID (For CASCADE events, customers should use “CASCADE” as the Corporate Action ID);
- ISIN;
- Account number;
- Elected option;
- Instructed quantity (please refer to the eligible balance on the account);
- Applicable tax rate (to be specified in the SWIFT field :92a::TAXB or for Xact Web Portal and CreationOnline in the Tax Rate field).
- Customer’s full contact details;
- The BO List reference (to be specified in the SWIFT field INST or for Xact Web Portal and CreationOnline in the beneficial owner details);
- For OIVs/OPCIVs only, the following wording in SWIFT field INST or for Xact Web Portal and CreationOnline in the CORPORATE ACTIONS NARRATIVE field:
“We, Account number _____ (insert account number) confirm that the underlying holders of the OIV/OPCIV (delete as appropriate) have not changed since the date of the form 29-13.”
Important note: Any missing information might result in a rejection of the electronic instruction.
Upload of BO list
Along with the electronic instruction, customers must submit a BO List via Clearstream Banking’s Upload Beneficial Owner List application. Customers must upload the BO List using the new template and submit all required data.
Note: Customers must mention “CASCADE” in the required CORP ID field on the “File Upload Information” page, section “Payment Details” of the Upload Beneficial Owner List application.
Important note: BO lists that are modified, altered, do not fit the template provided or with incorrect data will be rejected by Clearstream Banking.
Note: The BO list must be associated to a valid electronic instruction. The BO list does not constitute a valid instruction without a valid electronic instruction.
Additional documentation required
In addition, holders deemed to be OIVs, OPCIVs, pension funds, non-profit organisations or world-exempt entities are requested to provide Clearstream Banking with the following forms:
- For OIVs:
Report of Overseas Investment Vehicle (Form 29-13, section 2) and schedule of Beneficial Owners (Annex to Form 29-13) - For OPCIVs:
Report of Overseas Investment Vehicle (Form 29-13, section 1)
Important note:
One original Form 29-13 must be submitted before the dividend season.
Customers undertake to notify Clearstream Banking via authenticated means of communication before the applicable deadline for relief at source, of any holding of securities for which the data included in the Form 29-13 is no more accurate and therefore may not apply. In the absence of such notification, customers irrevocably authorise Clearstream Banking to consider by default, on each relevant income payment date the entire holding of securities as being beneficially owned on behalf of the eligible beneficial owners mentioned in Form 29-13 and customers appoint Clearstream Banking to request a reduced rate of Korean withholding taxed based on it.
Copies of the Form 29-13 will be accepted for the subsequent elections customers might make for the same beneficiary during the same dividend cycle. However, in order for the copies to be accepted, the electronic instruction must bear the following wording in the SWIFT field ADTX or for Xact Web Portal and CreationOnline in the Corporate Actions Narrative field:
“ We, _________ (Insert account number), confirm that the underlying holders of the OIV/OPCIV (Delete as appropriate) have not changed since the date of the Form 29-13.”
If the above-mentioned SWIFT, Xact Web Portal or CreationOnline confirmation is not received, copies of the Form 29-13 will not be accepted. - For pension funds and non-profit organisations:
Necessary documents include but are not limited to a Certificate of Residence (COR) or any other original documents supporting the status of the pension fund/non-profit organisation.
Important note:
Form 72-2 is no longer accepted for pension funds and non-profit organisations.
For final beneficial owners that have already submitted a Form 72-2, the form remains valid until its expiry date of three years after its issuance date, if there is no change in circumstances.
After that date, only a COR or any other original documents supporting the status of the pension fund/non-profit organisation will be allowed.
Pension funds and non-profit organisations that are currently not covered by a Form 72-2 must provide a COR or any other original documents supporting their status instead of a Form 72-2. - For world-exempt entities:
Form 29-2(1) and supporting documents to prove the world-exempt status and COR (the tax year must match year of payment date). - For US beneficial owners:
In order for US beneficial owners to receive a reduced tax rate an original W9 is required for each dividend season. - For Korea-domiciled beneficial owners:
In order for Korea-domiciled beneficial owners to receive a reduced tax rate or exemption from withholding tax, a verifiable identification number is required, a copy of the form (passport, drivers license, or resident registration number for individuals, copy of company/ business registration ID for entities) must be submitted by the end of Clearstream Banking’s deadline. In addition, beneficial owners acting under a trustee agreement may be asked for a COR to prove tax status. Korean legal entities must submit an original COR.
Important notes
Japanese individuals must provide the personal identification number or birth date in the BO List.
Japanese corporations must provide a corporate tax identification number in the BO list.
Luxembourg SICAVs, SICAFs and FCPs may be eligible to benefit from a reduced tax rate in accordance with the Double Taxation Treaty (DTT), such vehicles may fall under the OIV/OPCIV category and are required to submit the appropriate Form 29-13.
Customer should note that the original documentation/ DTCC notice with the full requirements is available on the DTCC website. Customers are strongly recommended to obtain the original DTC notice to ensure they are aware and comply with the full requirements for this event.
All documentation must be submitted and received for processing at the following address before the end of Clearstream Banking’s deadline:
OTL - Tax Service Luxembourg
Clearstream Banking S.A.
42, avenue J.F. Kennedy
L-1855 Luxembourg
Luxembourg
Copies can be submitted by email to tax@clearstream.com specifying in the subject line: Account number, ISIN code, corp ID (that should be “CASCADE” for CASCADE events), and electronic instruction reference.
Disclaimer
Please be aware that it remains the sole responsibility of the customer to provide complete, accurate and up to date documentation. Clearstream Banking is not in a position to validate the information before transmitting to the National Tax Service (NTS) and will not take any responsibility in that sense. Please also be advised that the NTS reserves the right to review the tax claims and documentation received for a period up to five years starting from the dividend payment date.
This means that up to five years after the dividend payment date, the NTS may reject the documentation presented, request further information or decide to cancel the reduced rate claimed and request a repayment of the tax difference between the favorable rate and the default rate as well as potential penalties and interest.
Clearstream Banking hereby reserves its rights in such an event and customers hereby acknowledge such risk, and agree to be fully liable towards Clearstream Banking for the payment of the amount claimed by the NST and the debit by Clearstream Banking of the amount claimed by the NST on their account with Clearstream Banking, for a period up to five years after the dividend payment date.
Further information
Please refer to ADRs - Double Taxation Treaties concluded by South Korea and currently in force for an overview of taxation rates of individual countries.
For further information, customers may contact the Clearstream Banking Tax Help Desk or Clearstream Banking Client Services or their Relationship Officer.
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1. This Announcement is published by 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.