Refund from Clearstream Banking - eligibility, documentation, deadlines - U.S. equities
By default, any U.S. taxable dividend payment is subject to:
- 30% FATCA tax rate if Clearstream Banking does not receive sufficient information/documentation to evidence that 30% FATCA should not be withheld at source, or
- 30% NRA tax rate, if Clearstream Banking received before the relief at source deadline sufficient information/documentation to evidence that 30% FATCA should not be withheld, but didn’t receive sufficient information/documentation evidencing that a tax exemption/reduced tax rate could have been granted at source.
- 30%1 FATCA tax rate if Clearstream Banking client acting as a foreign intermediary
- does not assume Form 1099 reporting and back-up withholding responsibility,
- has certified an omnibus account (with a W-8IMY and OTC in its own name) confirming that it holds the US source equities solely on behalf of several U.S. specified persons for which a 1099 reporting is required, and
- has failed to furnish an IRS form W-9 with U.S. TIN in the name of the U.S. specified person(s) and/or a per payment instruction at source
Who can apply for a refund2?
- Refund of FATCA/NRA withholding tax (as applicable) on dividends from U.S. equities is available through Clearstream Banking, provided that:
- Clearstream Banking’s direct client is the final beneficial owner, FATCA compliant and resident in a country which has signed a Double Taxation Treaty (DTT) with the USA, or
- Clearstream Banking’s direct client is a U.S. exempt person, or
- Clearstream Banking’s direct client is a Qualified Intermediary (QI) that assumes primary nonresident alien (NRA) withholding responsibility and Form 1099 and back-up withholding responsibility (QIA), or
- Clearstream Banking’s direct client is a QI that assumes primary NRA withholding responsibility but does not assume Form 1099 and back-up withholding responsibility (QIB), or
- Clearstream Banking’s direct client
- is a QI that does not assume primary NRA withholding responsibility, but that assumes Form 1099 and back-up withholding responsibility (QID) and
- holds the U.S. source securities on behalf of FATCA compliant recipients being non-U.S. beneficial owners that are residents in a country that has signed a DTT with the U.S.A. and/or US persons or
- Clearstream Banking’s direct client
- is a QI that does not assume primary NRA withholding responsibility nor Form 1099 and back-up withholding responsibility (QIC) and
- holds the securities on behalf of FATCA compliant recipient being non-U.S. beneficial owners that are residents in a treaty that has signed a DTT with the U.S.A. and/or US exempt persons and/or U.S. specified persons in a payee pool and/or U.S. specified persons for which a 1099 reporting is required or
- Clearstream Banking’s direct client
- is a FATCA compliant Non-Qualified Intermediary (NQI) and
- holds the securities (either directly or indirectly via a an additional FACTA compliant NQI intermediary) on behalf of recipients that are FATCA compliant final beneficial owners that are residents in a country that has signed a DTT with the U.S.A. and/or FATCA compliant QIs and/or US exempt recipient and/or US specified persons in a payee pool and/or U.S. specified persons for which a 1099 reporting is required
- Refund of back-up withholding tax is not available through ClearstreamBanking
- Refund of withholding tax from the IRS is not available through Clearstream Banking
Documentation requirements
In order to benefit from a refund of FATCA/NRA withholding tax on dividends from U.S. equities, clients must ensure to provide Clearstream Banking with the following documents (unless part of the documents were already provided to Clearstream Banking) within the applicable deadlines. The related templates of the documents are available on our Tax forms to use section.
For all clients applying for FATCA/NRA withholding tax refunds on dividends from U.S. equities:
- An IRS form (W-8IMY, W-8BEN-E, W-8EXP, W-8ECI, W-9 – as applicable), in the name of the Clearstream Banking client,
- A One-time certificate (OTC), in the name of the Clearstream Banking client.
Clearstream Banking clients may use the Decision table (see attached below) in order to identify which template of OTC needs to be provided, depending on their status and needs. Should Clearstream Banking clientr not find any OTC matching their requirements, a specific request needs to be raised to our Tax Helpdesk.
In addition, for Clearstream Banking clients that are foreign intermediaries, the below additional documentation may have to be provided, depending on the Chapter 3 status of Clearstream Banking client and the account structure selected in the OTC. Such additional documentation is fully described in the relevant OTC and may consist in:
- An IRS form (W-8BEN-E, W-8EXP, W-8ECI, W-8BEN, W-9 – as applicable) in the name of the FATCA compliant non-U.S. beneficial owner(s) or U.S. exempt recipient or U.S. specified person
- A per payment instruction for refund, fulfilling formatting requirements described under the section “Form description”.
Clearstream Banking deadline for refund applications
The deadline by which Clearstream Banking must receive the documentation for refund application is on 31 December of the year3 in which the applicable dividend payment was made.
Important note: Tax refunds are processed in the order received by Clearstream Banking and only when there are sufficient funds in Clearstream Banking internal tax account.
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1. 24% back-up withholding tax for payments on U.S. sourced short term OID and bank deposit interest.
2. Tax refunds are processed in the order received by Clearstream Banking and only when there are sufficient funds in Clearstream Banking internal tax account.
3. Clearstream Banking may grant few additional days after the 31 December of the year in which the income was paid. Such extended deadline would be published to Clearstream Banking clients in a dedicated announcement and will always be set before Clearstream Banking’s deadline to pay the last tax deposit for the impacted calendar year to the IRS (according to IRS instructions).