Foreign Shares in collective safe custody: Quick Refund Procedure on Russian DRs only - Update

23.01.2015

Note: This announcement, originally published on 27 June 2014, 3 July 2014, 15 July 2014, 5 August 2014, 9 October 2014, 16 October 2014, 7 November 2014, 21 November 2014 and 15 January 2015 was updated to change the quick refund deadline for ISIN US6778621044.

Clearstream Banking1 informs customers about the possibility for a quick refund on Russian Depository Receipts (DRs) in collective safe custody for the below mentioned ISINs.

Since 1 January 1 2014 withholding tax and disclosure procedures apply to DRs with Russian underlying securities (referred to herein as “Russian DRs”) with a record date as of 1 January 2014. General information regarding withholding tax and disclosure procedures for Russian DRs are available in Announcement A14027 from 25 February 2014.

All customers in collective safe custody will receive first a dividend net of the 30% withholding tax rate (15% statutory rate plus 15% non-disclosure punitive rate) for the below-mentioned ISINs and can start a quick refund thereafter.

Quick refund

In order to benefit from quick refund on income from Russian DRs, customers will need to ensure that we receive the following documents before the respective deadline of the ISIN listed in the table below.

One-Time Certificate for DRs with Russian underlying Securities

The One-Time Certificate (see version attached below) must be submitted by all customers, regardless of the residency and status of the beneficial owners, before the first trade in Russian DRs or at the latest before the first impacted income payment date and must state that the customer holds the securities, either via:

Box 1 – Standing instruction: Exclusively for one single beneficial owner (which may be the customer or his underlying client) eligible for reduced tax rates. By ticking Box 1, a reduced tax rate is applied by default at source on all further interest payments. The customer must, in order to comply with the reporting obligations, complete the beneficial owner’s data as described in the One-Time Certificate and authorise Clearstream Banking to forward these details together with the total holding to the Russian authorities (through the depository and agents) for each income payment made to the customer’s account.

Or via

Box 2 – Standing instruction: On behalf of several beneficial owners (including the customer, when applicable), being exclusively either legal entities or individuals and:

  • Residents of the same country and applying for the same tax rate (double taxation treaty (DTT) rate or 15% statutory rate);
  • Russian residents.

By ticking the Box 2, the requested reduced rate of tax is applied by default at source on all further income payments. The customer must, in order to comply with the reporting obligations, complete the beneficial owners’ data as described in the One-Time Certificate and authorise Clearstream Banking to forward these details together with the total holding to the Russian authorities (through the depository and agents)for each income payment made to the customer’s account.

Or

Box 3 – Instruction per payment: On behalf of several beneficial owners that are residents of different countries and eligible for reduced rates of tax as above but also on behalf of beneficial owners that are not willing to disclose their holdings and country of residence. In addition to the One-Time Certificate, the customer is required to submit, before each income payment, a Breakdown of Holdings as explained below.

One-Time Certificates that have more than one box ticked are not valid and will be rejected.

Breakdown of Holdings

When Box 3 was ticked in the One-Time Certificate, a Breakdown of Holdings must be provided, before each impacted income event, via SWIFT MT599 or CreationOnline free-format message indicating:

  • ISIN;
  • Payment date;
  • Customer’s Clearstream Banking account number;
  • Customer’s total holding;
  • Per country of residence and legal status of beneficial owner:
    • Country of residence;
    • DTT details (article, paragraph, sub-paragraph);
    • Legal status (individual/legal entity);
    • Total holding;
    • Tax rate to apply;
    • Total holding that remains undisclosed.

All these declared positions must be accurate on the relevant record date indicated in Clearstream Banking’s tax notification at 19:00 CET, meaning that no further transactions are allowed after the submission of the Breakdown of Holdings. If there is a discrepancy between the declared positions and the customer’s total holding visible in Clearstream Banking's books, the application for tax exemption will be rejected and, consequently, the maximum tax rate of 30% will be applied.

Furthermore, if Box 3 of the One-Time Certificate is ticked and we receive no Breakdown of Holdings by the prescribed deadline, the customer’s total holding will be considered as being undisclosed and, as a consequence, the maximum standard tax rate will be applied.

In addition, if a One-time Certificate with box 1 or 2 ticked is submitted for a quick refund application, customers are obliged to send in addition a SWIFT MT599 or CreationOnline free-format message indicating the ISIN and payment date for which the standing instruction must be applied.

Deadlines and fees

In order to benefit from a quick refund from Russian DRs, customers must ensure that Clearstream Banking receives the above-described documents for the below-mentioned ISINs by the indicated deadlines:

ISINNameRDRASQuick refund deadline
US0373763087ADR OAO MOSENERGO16.06.201431.07.2014
US0654531021ADR BANK VOZROZHDENIYE (SEC REG 1SHS)07.08.201409.07.201410.07.2014
US46626D1081ADR NORILSK NICKEL22.12.201423.12.201405.02.2015
US80585Y3080ADR SBERBANK ROSSII REG17.06.2014 29.07.2014
US36829G1076ADR GAZPROM NEFYANYA KOMPANIYA

17.10.2014

20.10.2014

01.12.2014

US4627141066ADR JSC IRKUTSKENERGO25.06.2014 05.08.2014
US8688611057ADR JSC SURGUTNEFTEGAZ(100 PREF SHS)(SEC)17.07.201416.07.201427.08.2014
US8688612048ADR SURGUTNEFTEGAZ-US8688612048-17.07.201416.07.201427.08.2014
US3682872078ADR GAZPROM OAO BR 1 ADR / 2 SHS17.07.201418.07.201402.09.2014
US6778621044ADR LUKOIL26.12.201427.12.201406.02.2015
US6708312052ADR OAO TATNEFT REG
16.07.2014		 
22.08.2014
US6074091090ADR MOBILE TELESYSTEMS OJSC14.10.201415.10.201421.11.2014

A depository service charge of USD 0.005 per ADR will apply and potentially an external minimum service charge per beneficial owner of USD 25.00 may apply.

Quick Refund Matrix

Unfavorable (30%) for non- disclosed countries or non-eligible DTT beneficial owners

Favorable (15%) for eligible residents of any disclosed non-DTT country or DTT country granting a 15% DTT rate

Exempt (12%) for eligible residents from Finland

Exempt (10%) for eligible residents from Albania, Armenia, Azerbaijan, Belgium, Botswana, Chile, China, Croatia, Cyprus, Czech Republic, Denmark, Egypt, Greece, Hungary, India, Iran, Ireland, Israel, Italy, Kazakhstan, Democratic People's Republic of Korea, Republic of Korea, Kyrgyzstan, Latvia, Lebanon, Lithuania, Macedonia, Mexico, Moldova, Mongolia, Morocco, Namibia, Norway, Poland, Singapore, Slovakia, Slovenia, Tajikistan, Turkey, Turkmenistan, United Kingdom, United States of America, Uzbekistan

Exempt (9%) for eligible residents from Russia

Exempt (5%) for eligible residents from Kuwait, Qatar, Saudi Arabia

The Russian authorities may audit disclosed shares for up to three years after a dividend payment.

Requests for further information may be expect to be made for an original certificate of residency (COR) containing specific language regarding a DTT (if applicable) between the country of residence and the Russia. These forms may also need to be apostilled. There is a 90-day period to provide audit documentation to the authorities with the possibility for 90-day extension. The Russian authorities reserve the right to request additional information/forms as they deem necessary.

Note: The standard refund process with the Russian Tax Authorities is extremely complex and time-consuming and this procedure will not offered or supported by Clearstream Banking. As a consequence, we strongly suggest that customers apply for a quick refund in order to obtain the reduced tax rates. Furthermore, the DR agent has not yet confirmed that the standard refund service will be offered.
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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.

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