Iceland: Abolition of withholding tax on interest and capital gains from certain Icelandic fixed income securities

28.03.2013

Further to our Taxflash LT13002, dated 4 January 2013, the Icelandic Ministry of Finance has presented a new Bill to Parliament proposing to change the withholding tax law applicable on fixed income securities. The Icelandic Parliament approved the Bill on the 27 March 2013.

The change will abolish withholding tax on interest and capital gains from Icelandic fixed income securities, for both foreign and resident investors, that are issued by Icelandic financial institutions or Icelandic energy corporations.

The Bill will be effective from 15 March 2013.

Exemption will be granted at issuer and instrument level. In order to qualify for the exemption, issuers must meet a set of specific requirements. These include, but are not limited to:

  • Issuance of the bonds must be done in their own name.
  • Issuers must qualify as financial institution by meeting the requirements set forth under Article 4 of the Act no. 161/2002 on Financial Institutions or, if an Energy Company, be subject to Act no. 50/2005 on the Taxation of Energy Companies.

We continue to monitor developments and will provide further information in respect of any details regarding the operational changes in the processing of these instruments as it becomes available.

This Taxflash is intended to provide customers with general information gathered from different sources that are generally believed to be reliable. Clearstream Banking S.A. does not guarantee the accuracy or completeness of the information and does not undertake to keep it up to date. Use of the information made available in this Taxflash is at the customer’s own risk and Clearstream Banking S.A., its subsidiaries and affiliates expressly disclaim any liability for any errors or omissions reflected herein. The information in this Taxflash does not constitute legal or tax advice.