Japan: New tax relief procedure for listed Japanese equities
For dividend payments with value date on/after
1 January 2014
the new tax procedure described below will apply for tax relief at source on income from Japanese listed equities.
This is further to our Announcement L13161, dated 3 December 2013.
Impact on customers
As of 1 January 2014, the current Clearstream Banking1 relief at source and refund procedure will no longer be valid.
Customers are therefore requested to submit the below-mentioned new certification to Clearstream Banking in order to benefit from our new relief at source procedure.
As of 1 January 2014, dividend payments for which the new certification has not been provided before our stated deadline will be taxed at the Clearstream Banking default rate (currently 15.315%).
Beneficial owners eligible for relief/exemption
Relief at source is available for beneficial owners that are:
- Residents of a country that has a Double Taxation Treaty (DTT) with Japan;
- Exempt entities (such as international or supranational organisations).
N.B.: Residents of Japan are subject to 20.315% withholding tax for individuals and 15.315% for corporations.
Documentation requirements
To obtain relief or exemption at source from withholding tax on income from Japanese listed equities, customers must provide the following documentation to us (for the attention of Singapore Tax Team - SIT) within our deadlines (see “Deadlines” below):
- A One-Time Certificate for Japanese Listed Equities2, signed and completed by the customer;
- Before each payment, a Payment Breakdown (via Clearstream Banking’s Upload Beneficial Owner List facility), giving details of the beneficial owners and the respective tax rates requested.
The following documentation is requested in addition for specific types of beneficial owner, as indicated:
- A Certificate of Residence2 issued by the beneficial owner’s local tax authorities:
- UK, Dutch and Swiss pension funds;
- U.S. pension funds
- U.S. individuals;
- U.S. national and local authorities etc., U.S. publicly traded companies and their subsidiaries and U.S. public service organisations;
- U.S. investment vehicles (such as mutual funds etc.).
The Certificate of Residence is in general valid for three years from date of issuance but, for U.S. investment vehicles, it is valid for one year only. - Form 17 Attachment Form for Limitation on Benefits Article2:
- U.S. national and local authorities etc., U.S. publicly traded companies and their subsidiaries and U.S. public service organisations - Part A must be completed;
- U.S. investment vehicles (such as mutual funds etc.) - Part B, C or D must be completed, as applicable.
N.B.: U.S. investment vehicles may opt to complete the “Declaration Letter” (see below) instead of Part B on the Form 17. Form 17 is, however, in any case, needed for U.S. investment vehicles.
The Form 17 is in general valid for three years from date of issuance but, for U.S. investment vehicles, it is valid for one year only. - Declaration Letter2:
- U.S investment vehicles (such as mutual funds etc.) for whom Part B on Form 17 is normally applicable.
The Declaration Letter is valid for one year from date of issuance. - A copy of the Official Certification (for example, founding documents).
- Exempt entities (such as international or supranational organisations).
The certificate is valid until revoked. - A notarised Power of Attorney from Beneficial Owner to HSBC2
- Exempt entities (such as international or supranational organisations).
The certificate must be notarised and is valid until revoked.
Furthermore, we may request the following additional documentation:
- Proof of tax residence for beneficial owners that are eligible to obtain a reduced rate of withholding tax at source; and
- Any other tax documentation requested from time to time.
Important note for residents of Japan that are individuals (subject to 20.315%)
For Japanese listed equities, we apply 15.315% non-resident withholding tax by default.
Customers holding on behalf of Japanese residents that are individuals must, therefore, in order to ensure that the correct tax rate of 20.315% is applied, provide a Payment Breakdown (via Clearstream Banking’s Upload Beneficial Owner List facility) per payment.
Customers are reminded that it is the customer's responsibility to ensure that final beneficial owners are eligible for the tax rates applied, including the Clearstream Banking default rates.
It is the responsibility of the customer to comply with this obligation. Neither Clearstream Banking nor its local depository has any direct or indirect liability towards the Japanese authorities in this regard.
Deadlines
The deadline for the receipt by Clearstream Banking of the documentation to obtain exemption or relief at source from withholding tax on income from Japanese listed equities is, at the latest, five business days after the relevant record date, at 10:00 CET.
Further information
The information published in the Clearstream Banking Tax area – Japan will be updated in due course.
A new procedure for standard refund of withholding tax on dividends from Japanese listed equities, available through Clearstream Banking, is also applicable as of 1 January 2014 and operational details and guidelines will be published shortly.
For further information, customers may contact the Clearstream Banking Tax Help Desk on:
| Luxembourg | Frankfurt | Singapore | |
| Email: | tax@clearstream.com | tax@clearstream.com | tax@clearstream.com |
| Telephone: | +352-243-32835 | +49-(0) 69-2 11-1 3821 | +65-6597-1665 |
| Fax: | +352-243-632835 | +49-(0) 69-2 11-61 3821 |
or Clearstream Banking Customer Service or their Relationship Officer.
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1. Clearstream Banking refers collectively to Clearstream Banking AG, registered office at 61, Mergenthalerallee, 65760 Eschborn, Germany and registered in Register B of the Amtsgericht Frankfurt am Main, Germany under number HRB 7500 (CBF) and Clearstream Banking S.A., registered office at 42, avenue John F. Kennedy, L-1855 Luxembourg, and registered with the Luxembourg Register of Commerce and Companies under number B-9248 (CBL).
2. See attachment (which also includes a list of the Double Taxation Treaties (DTTs) concluded by Japan and currently in force with regard to Japanese listed equities, with the respective DTT rates).
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