Japan: New tax relief procedure for Japanese ADRs
For dividend payments with value date on/after
1 January 2014
the new tax procedure described below will apply for tax exemption or relief at source on income from Japanese American Depository Receipts (ADRs) that are held via Clearstream Banking1.
Impact on customers
As of 1 January 2014, the current Clearstream Banking tax procedure for Japanese ADRs is no longer valid and, in order to benefit from the new tax procedure, customers are requested to submit the below-mentioned new certification.
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 countries that have a Double Taxation Treaty (DTT) with Japan;
- Exempt entities (such as international or supranational organisations);
- Exempt pension funds resident in The Netherlands, Switzerland, The UK and The U.S.A.
N.B.: Residents of Japan are subject to 20.315% withholding tax for individuals and 15.315% for corporations.
Documentation requirements
To obtain exemption or relief at source from withholding tax on income from Japanese ADRs, customers must provide the following documentation to us (Attn: Luxembourg Tax Team - OTL) before our deadlines (see “Deadlines” below):
Residents of a country that has Double Taxation Treaty (DTT) with Japan (Favourable Rate)
- A One-Time Certificate for Japanese ADRs2, signed and completed by the customer;
- Before each payment, a Payment Breakdown (via SWIFT MT599), including the following information:
- Customer account number;
- Payment date;
- Record date;
- Number of shares;
- Applicable tax rate;
- Name, address and country of residence of the beneficial owner.
Exempt entities, such as international or supranational organisations (Favourable Rate)
- A One-Time Certificate for Japanese ADRs2, signed and completed by the customer;
- Before each payment, a Payment Breakdown (via SWIFT MT599), including the following information:
- Customer account number;
- Payment date;
- Record date;
- Number of shares;
- Applicable tax rate;
- Name, address and country of residence of the beneficial owner.
- A government issued certification or other supporting document(s) acknowledging the beneficial owner as world exempt.
Exempt pension funds resident in The Netherlands, Switzerland, The UK and The U.S.A. (Favourable Rate)
- A One-Time Certificate for Japanese ADRs2, signed and completed by the customer;
- Before each payment, a Payment Breakdown (via SWIFT MT599), including the following information:
- Customer account number;
- Payment date;
- Record date;
- Number of shares;
- Applicable tax rate;
- Name, address and country of residence of the beneficial owner;
- Tax Identification Number (TIN - only applicable for U.S. pension funds).
- An Appendix A - For Exempt Pension funds residents in Netherlands, Switzerland, United Kingdom and USA2, signed and completed by the exempt pension fund.
The depository bank to be inserted in the Appendix A will be communicated to customers via the tax notification. - An Appendix B - Power of Attorney2, printed under the pension fund’s letterhead, signed and completed by the exempt pension fund and issued to the depository bank that is sponsoring the event.
The depository bank will be communicated to customers in our tax notification per event..
Residents of Japan that are individuals and subject to 20.315% (Favourable Rate)
- A One-Time Certificate for Japanese ADRs2, signed and completed by the customer;
- Before each payment, a Payment Breakdown (via SWIFT MT599), including the following information:
- Customer account number;
- Payment date;
- Record date;
- Number of shares;
- Applicable tax rate (20.315%);
- Japanese Tax Identification Number (TIN).
Foreign and Japanese individuals holding 3% or more of the issued shares subject to 20.42% (Unfavourable Rate)
- A One-Time Certificate for Japanese ADRs2, signed and completed by the customer;
- Before each payment, a Payment Breakdown (via SWIFT MT599), including the following information:
- Customer account number;
- Payment date;
- Record date;
- Number of shares;
- Applicable tax rate (20.42%);
- Japanese Tax Identification Number (TIN).
Furthermore, the following documentation must be provided by all customers upon request:
- Proof of tax residence from the beneficial owner(s) for whom the customer has previously applied for a reduced tax rate via the relief at source procedure.
This must be provided either via a Certificate of Residence issued by the beneficial owner’s local tax authorities or in lieu of an U.S. Internal Revenue Service (IRS) Form W-8BEN/ W-9.
All proof of residence must be signed, stamped and dated before the first dividend payment date to which it applies and, additionally:- Certificate of Residence must be issued within nine months and in the same year of the dividend payment and furthermore, in case of an exempt pension fund, must show the exempt status of the pension fund.
- IRS Form W-8BEN must be dated within three years of the payment.
- IRS Form W9 may not contain a PO Box address and must include the U.S. TIN of the beneficial owner. It is valid until revoked.
- Any other tax documentation requested from time to time.
The relevant documentation must be submitted to Clearstream Banking via registered post (when applicable) to the following address:
Clearstream Banking S.A.
Attn: OTL - Tax Services
42, avenue J.F. Kennedy
L-1855 Luxembourg
Luxembourg
Important note
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 (currently 15.315%). 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 ADRs will be communicated on a per-payment basis via the Clearstream Banking tax notification.
Further information
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 to 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.
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