Sweden: New quick refund service for beneficial owners qualifying for withholding tax exemption under the EU Parent Subsidiary Directive – Update
Note: This Announcement, originally published on 19 April 2023, has been updated to include details on the confirmation of beneficial ownership eligibility. Changes have been highlighted.
Clearstream Banking1 informs clients that effective
immediately
a new and quick refund service is offered to beneficial owners that qualify for a withholding tax exemption, under the EU Parent Subsidiary Directive 2011/96/EU, on Swedish dividend distributions.
Eligible beneficial owners
To be eligible under the EU Parent Subsidiary Directive 2011/96/EU, the beneficial owners must, among other things, fulfil the following conditions:
- Be an EU resident;
- Hold at least 10% of the share capital in the Swedish company distributing the dividend;
- Be a legal entity described in Annex I part A of the Directive;
- Be subject to any of the taxes described in Annex I part B of the Directive.
Documentation requirements
In order to obtain a quick refund on behalf of eligible beneficial owners, clients must submit the following documentation to Clearstream Banking before the relevant deadlines:
One-Time Certificate for Swedish Equities
The certificate has to be completed by the client and remains valid until revoked.
Per-Payment Instruction
Clients must submit their per-payment instruction via an MT565 Corporate Action Instruction message in Xact via Swift or a corporate action instruction in Xact Web Portal, when requesting quick refund on dividends from Swedish equities.
The per-payment instruction must be provided per each tax rate and country of tax residence requested, if applicable, and must include:
- Clearstream Banking account number;
- ISIN code;
- Corporate ID;
- Total holdings;
- Number of shares to which the exempt tax rate applies.
Additionally, the following formatting information is required in the per-payment instruction for beneficial owners who are eligible for a full tax exemption (0%) according to the EU Parent Subsidiary Directive 2011/96/EU:
Xact via Swift | Xact Web Portal |
Sequence C: Beneficial owner’s details – BENODET | Beneficial owner details |
:95V: OWND Beneficial Owner | The beneficial owner’s details under the “Party” |
:94C: DOMI Country of Domicile | Country of domicile (for beneficial owner details) |
:70E: CETI Legal status of the beneficial owner (EU PARENT SUBSIDIARY DIRECTIVE REGULATED IN COUNCIL DIRECTIVE 2011/96/EU) | The beneficial owner’s legal status under the “Narrative” (EU PARENT SUBSIDIARY DIRECTIVE REGULATED IN COUNCIL DIRECTIVE 2011/96/EU) |
For full formatting requirements of these instructions, clients should refer to the MT564 Corporate Action Notification message and to the Xact via Swift User Guide.
Certificate of tax residence
The certificate of tax residence must:
- Refer to the year in which the dividend payment took place;
- Include the name and the tax identification number of the beneficial owner;
- Confirm that the beneficiary is resident within the meaning of article 4 of the tax convention between its country of tax residence and Sweden and is subject to corporate income tax without any possibility of an option for being exempt.
The certificate of tax residence may be provided as a copy (original upon request) via post and will remain valid for the full calendar year if it meets the above requirements.
Note: It is not a requirement that the certificate of tax residence must refer to the EU Parent Subsidiary Directive (or the requirements set out in the Directive). However, in such instances where the certificate of tax residence does not provide such confirmation, the requirements will have to be stated in other documents.
Confirmation that the beneficial owner is a legal entity as described in Annex I part A and that it is subject to taxation as described in Annex I part B.
The confirmation has to be provided by submitting the following documents:
- Certificate of deposit from the custodian of the beneficial owner. This certificate should be issued by the direct custodian of the beneficial owner and confirm the number of shares, which the beneficial owner held with the custodian on the record date;
- An extract from the shareholder register;
- A confirmation from an audit firm or other local authority confirming that this company is regulated as described in the Directive.
The confirmation must be provided per each dividend payment and may be provided as a copy via post, but the original has to be provided upon request.
It is sufficient to just refer to the relevant article in the Directive and confirm that the company meets the requirement.
Important note: All documentation will be forwarded to Clearstream Banking’s local depository as received from the client and is subject to pre-approval by the depository before it can be used for applying any withholding tax exemption to the relevant dividend payment.
In addition, other supporting information than the above stated may be requested, should Clearstream Banking’s local depository deem this necessary in order to apply the requested exemption. Should additional information or documentation be required, Clearstream Banking will contact the client.
Confirmation of beneficial ownership eligibility
The confirmation must be sent via Swift MT599, using the template attached below. The confirmation is to certify that, compared to the previous year, no changes affecting the eligibility of the beneficial owner to qualify for a withholding tax exemption, under the EU Parent Subsidiary Directive 2011/96/EU on Swedish dividend distributions, has occurred.
The confirmation is not required for the first quick refund request, but must be submitted for all subsequent requests.
Deadlines
The deadlines for the submission of the documentation to obtain quick refund of withholding tax on dividends on Swedish equities are as follows:
Deadline for receipt by Clearstream Banking
Document | Quick refund |
One-Time Certificate for Swedish Equities | Six weeks after the first income payment date, by 10:00 CET. |
Per-payment instruction | Six weeks after the income payment date, by 10:00 CET. |
Certificate of tax residence | Six weeks after the income payment date, by 10:00 CET. |
Confirmation that the beneficial owner is a legal entity as described in Annex I part A and that it is subject to taxation as described in Annex I part B | Six weeks after the income payment date, by 10:00 CET. |
Confirmation of beneficial ownership | Six weeks after the income payment date, by 10:00 CET. |
Important note:
The required documentation, when claiming exemption of withholding tax on dividend payment from Swedish equities, via the quick refund procedure, for eligible beneficial owners according to the EU Parent Subsidiary Directive 2011/96/EU, must be provided by the Clearstream Banking deadline stated above.
Upon receipt of the documentation, the local depository will perform a pre-approval of the provided documents. There is no defined time frame provided for by the local depository for such pre-approval process as it may vary from case to case.
Clients should further note that beneficial owners may effectively only be eligible for the tax exemption once the file has been approved by Clearstream’s local depository.
Given the above pre-approval process, in the absence of any gross negligence, Clearstream Banking accepts no responsibility if the requested exemption via quick refund is rejected by its local depository and/or relevant tax authorities and/or if the market deadline for quick refund has passed due to the pre-approval process and or any request for additional documentation during the pre-approval process and, more generally, any event outside Clearstream Banking’s reasonable control.
Impact on clients
Clients wishing to apply for a quick refund on behalf of beneficial owners that are eligible for tax exemption under the EU Parent Subsidiary Directive 2011/96/EU are required to provide certification in accordance with the above stated procedure.
Relief at source is not available for beneficial owners that are eligible for tax exemption under this Directive.
Further information
For further information, customers may contact Clearstream Banking Client Services, their Relationship Officer or Tax Help Desk.
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1. Clearstream Banking refers collectively to 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, and Clearstream Banking AG (for Clearstream Banking AG customers using Creation Accounts), registered office at 61, Mergenthalerallee, 65760 Eschborn, Germany and registered in Register B of the Amtsgericht Frankfurt am Main, Germany under number HRB 7500.