Japanese Eurobonds - rates, eligibility, availability of relief etc.
Withholding Tax
| Standard rate of withholding tax: | 15.315% | Holding requirements / restrictions: | No |
The standard rate of withholding tax on interest from Japanese Eurobonds is 15.315% in Clearstream Banking.
Japanese Eurobonds are debt securities issued outside Japan, on or after 1 April 1998, by:
- Japanese corporations and certain Japanese government agencies, in any currency; or
- The Japanese Government, in any currency other than Japanese Yen.
Important notes:
The relief at source procedure described below does not apply to the following Eurobonds:
- Commercial Paper;
- Tap-notes provided for in securities offerings prior to 1 April 1998;
- Securities denominated in Swiss Francs that are offered and provide for payments only in Switzerland and for which certain other conditions apply;
- Discounted issues;
- Taxable Linked Securities; and
- Certain private-placed eurobonds.
Some Japanese private-placed Eurobonds do not follow the normal tax relief procedure (that is, according to International Capital Market Services Association (ICMSA) guidelines), as the provisions of the Japanese special taxation measures are different from those applied to publicly offered Eurobonds. Consequently, other tax documentation may be requested according to notice from the issuer.
To obtain exemption at source from withholding tax on interest from Japanese Eurobonds, the relevant documentation must be provided to Clearstream Banking before the respective interest payment date (see “Deadlines for receipt of documents” below).
Eurobonds following the ICMSA procedure
Availability of relief
The following types of beneficial owner can, provided that the appropriate documentation is submitted to Clearstream Banking, obtain exemption from withholding tax on interest from Japanese Eurobonds following the ICMSA procedure:
- Non-residents of Japan;
- Designated Financial Institutions (DFIs) - provided that the Clearstream Banking customer has DFI status and is the sole beneficial owner of the Japanese Eurobonds in the account (proprietary assets); and
- Tax residents of Japan (individuals or corporations) who receive interest payments through a Payment Handling Agent (PHA) in Japan.
N.B.:Non-resident beneficial owners that are “specially related persons of the issuer” (as defined in Article 6, paragraph (4) of the Act on Special Measures Concerning) do not qualify for the tax exemption on interest payments from Japanese Eurobonds issued on/after April 2010.
A standard refund of withholding tax on interest from Japanese Eurobonds is not available through Clearstream Banking.
Documentation requirements
To obtain exemption at source from withholding tax on interest from Japanese Eurobonds following the ICMSA procedure, the following documentation, depending on the customer’s Japanese PHA status, must be provided to Clearstream Banking before the respective interest payment date (see “Deadlines for receipt of documents” below).
For customers that are not a PHA or that are a Japanese PHA but do not hold Japanese Eurobonds exclusively for beneficial owners that are individuals or corporations resident in Japan:
- Master Representation for Debt Obligations issued outside Japan before 1 April 2010 or
Master Representation for Debt Obligations issued outside Japan on/after 1 April 2010 (as applicable), signed and completed by the customer and valid until revoked. - Excluded Securities Notice, provided, per payment (if applicable), to exclude a payment from the previously provided Master Representation in cases where beneficial owners are not eligible for the tax exemption.
- Per-payment instruction, if applicable.
For customers that are a PHA holding Japanese Eurobonds exclusively for beneficial owners that are individuals or corporations resident in Japan:
- Japanese Payment Handling Agent Certificate.
- Per-payment instruction, if applicable.
Note: The per-payment instruction must include:
- Account number;
- ISIN;
- Corp ID;
- A breakdown of the position with the quantity (customers should refer to the eligible balance on the account) and the respective tax rate to apply;
- the customer’s full contact details.
The per-payment instruction should be submitted via SWIFT, CreationOnline or Xact Web Portal. Customers are required to specify in field INST (SWIFT) or in the Corporate actions narrative (CreationOnline) the following wording, as applicable:
- "submission of Master Representation"; or
- "submission of Excluded Securities Notice"; or
- "submission of Japanese Payment Handling Agent Certificate".
Customers who have already provided the required documentation to Clearstream Banking are not required to provide any per-payment instruction if the current certificate is still valid.
Deadlines for receipt of documents
Documentation for exemption at source from withholding tax on interest from Japanese Eurobonds following the ICMSA procedure must, in all cases, be received by Clearstream Banking at the latest four business days before the first interest payment date, by 10:00 CET.
A per-payment Excluded Securities Notice and per-payment instruction must be received four business days before each respective interest payment date, by 10:00 CET.
Eurobonds not following the ICMSA procedure
Availability of relief
The following types of beneficial owner can, provided that the appropriate documentation is submitted to Clearstream Banking, obtain exemption from withholding tax on interest from Japanese Eurobonds not following the ICMSA procedure:
- Non-residents of Japan;
- Designated Financial Institutions (DFIs) - provided that the Clearstream Banking customer has DFI status and is the sole beneficial owner of the Japanese Eurobonds in the account (proprietary assets).
N.B.:Non-resident beneficial owners that are “specially related persons of the issuer” (as defined in Article 6, paragraph (4) of the Act on Special Measures Concerning) do not qualify for the tax exemption on interest payments from Japanese Eurobonds issued on/after April 2010.
A standard refund of withholding tax on interest from Japanese Eurobonds is not available through Clearstream Banking.
Documentation requirements
To obtain exemption at source from withholding tax on interest from Japanese Eurobonds not following the ICMSA procedure, the following documentation must be provided to Clearstream Banking before the respective interest payment date (see “Deadlines for receipt of documents” below):
- Written Application for Tax Exemption from Japanese Withholding Tax, completed and signed per payment by the beneficial owner;
- Official evidence proving the name and residency of the beneficial owner, provided per payment, such as:
- A certificate of residence issued by the beneficial owner’s local tax authorities; or
- A certificate of corporate registration.
- List of Authorised Signatures
A certified copy of the signature list, including the signer of the form “written application for tax exemption from Japanese withholding tax”, is required and to be provided per payment.
Deadlines for receipt of documents
Documentation for exemption at source from withholding tax on interest from Japanese Eurobonds not following the ICMSA procedure must, in all cases, be received by Clearstream Banking at the latest three business days before the first interest payment date, by 10:00 CET.