Icelandic equities – standard refund – rates, eligibility, documentation, deadlines etc.
Who can apply for a standard refund?
A standard refund of withholding tax on dividend payments from Icelandic equities is available through Clearstream Banking for the following beneficial owners.
Eligible beneficial owners
Beneficial owner types | Applicable tax rate | Tax refund available |
Non-resident beneficial owner – legal entity | 21% a | 1% |
Non-resident beneficial owner of a DTT country | DTT | 22% minus DTT rate |
Non-resident tax exempt entity (international or supranational organizations) | 0% | 22% |
a. 20% was applicable prior to 1 January 2024.
Documentation requirements
In order to benefit from a standard refund of withholding tax on dividend from Icelandic equities, clients must submit the following documentation, depending on the beneficial owner type:
Beneficial owner types | Type of document |
Non-resident beneficial owner – legal entity |
|
Non-resident beneficial owner of a DTT country |
|
Non-resident tax exempt entity (international or supranational organisations) |
|
Form descriptions
The requested tax forms should be completed and provided to Clearstream Banking as follows:
Type of document | Description | Copy/ original | Frequency |
Form RSK 5.42 – Application under Double Taxation Agreement for an Exemption or partial relief from Icelandic Taxation | Only the document “entitled for the Icelandic Tax Authorities” is to be sent to the Clearstream Banking. It must in addition also be dated, signed and stamped, by the local tax authority of the beneficial owner. | Original | Every five years with the first reclaim application. If the refund is granted, the Form RSK 5.42 is valid for five years as of approval month, meaning no additional Form RSK 5.42 will be required to be included with further reclaim applications, during that period. For example: Application approved on 15.10.2020 is valid for the period of 1.10.2020 - 31.10.2025. |
Form RSK 5.43 – Application under Double Taxation Conventions for a Refund of Taxes Paid | Only the document “entitled for the Icelandic Tax Authorities” is to be sent to the Clearstream Banking. | Original | Per reclaim request |
Power of Attorney | Required if the reclaim forms are completed by a third party on behalf of the beneficial owner. | Original | Per reclaim request |
Credit Advice | The Credit Advice should be provided by all clients wishing to introduce a Standard reclaim. The full chain of credit advices from the final beneficiary to Clearstream banking must be provided. It identifies income payment details including the security type, gross amount of payment, date of payment and amount of tax withheld. It must be under the letterhead of the client or of the client’s agent and include the respective Clearstream Banking account number. | Original or certified copies | Per reclaim request |
Letter of Request to Clearstream Banking for Reclaim of Icelandic Withholding Tax | The Letter of Request should be provided by all clients wishing to introduce a standard reclaim. It authorises Clearstream to process the reclaim with the Icelandic Tax Authorities on the client’s behalf. Additionally, it specifies the payment details and beneficial owner information | Original | Per reclaim request |
Request to the Icelandic tax authorities for a refund | The form, must be used by beneficial owners for which there is no official reclaim form (no DTT) and must be dated and signed by the beneficial owner or its legal representative under power of attorney and detail the reclaim request. | Original | Per reclaim request |
Certificate of incorporation or other official document proving the status | The certificate of incorporation of the beneficial owner must be enclosed with the reclaim application, by entities not claiming DTT, to prove the status of the foreign entity. | Original or certified copy | Per reclaim request |
Statutory deadline
The statutory deadline for reclaiming withholding tax on income from Icelandic securities is six years after the date on which the tax was withheld. The deadline by which Clearstream Banking must receive the documentation is at least two months before the statutory deadline. All standard refund 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 Icelandic Tax Authorities by the date considered as being the statute of limitations deadline.
With respect to tax reclaims in general, clients are reminded that Clearstream Banking accepts no responsibility for their acceptance or non-acceptance by the tax authorities of the respective country. It is the client’s responsibility to determine any entitlement to a refund of tax withheld, to complete the required documentation correctly and to calculate the amount due.
Receipt of refunded amounts
The estimated time for receiving a standard refund is six to twelve months from the date on which the standard refund application was received by the Icelandic Tax Authorities, although this can vary depending on when the application was filed and the complexity of the information supplied in the reclaim form.
Notes on tax reclaims
Clients warrant the completeness and accuracy of the information they supply to Clearstream Banking.
It is the client's responsibility to determine any entitlement to a refund of tax withheld, to complete the forms required correctly and to calculate the amount due. Clearstream Banking is under no obligation to carry out any investigation in respect of such information.
With respect to tax reclaims in general, clients are reminded that Clearstream Banking accepts no responsibility for their acceptance or non-acceptance by the tax authorities of the respective country.