Iceland: Amended tax procedure for Icelandic non-taxable debt securities
Clearstream Banking1 is pleased to inform customers that, effective
6 April 2020
a new simplified tax procedure will be applicable for capital gains and income distributions derived from Icelandic non-taxable debt securities2 and has been enabled as a result of our ongoing collaboration with the Icelandic authorities.
Holding restrictions
Icelandic non-taxable debt securities, held on Clearstream Banking’s account at LuxCSD S.A. (via Nasdaq CSD Iceland - INCSD), may only be held by the following:
- Non-resident beneficial owners; and
- Clearstream Banking customers that are Icelandic intermediary banks complying with Article 3.2 of Act no. 94/1996; or
- Icelandic resident beneficial owners, if held via a Clearstream Banking customer, that is an Icelandic intermediary bank complying with Article 3.2 of Act no. 94/1996.
Positions that are held on behalf of Icelandic beneficial owners, may not be held via Clearstream Banking in any other cases.
Non-taxable debt securities
Withholding tax
Standard rate of withholding tax | 0% |
The standard rate of withholding tax on interest and redemption payments from non-taxable Icelandic debt securities, is the 0% non-resident rate in Clearstream Banking.
Eligible beneficial owners/recipients
Recipient types | Tax rate | Relief | Quick | Standard |
Non-resident beneficial owner | 0% | n/a | n/a | n/a |
Icelandic Banks complying with Article 3.2 of Act no. 94/1996 | 0% | n/a a | n/a | n/a |
a. Customers that are Icelandic Banks complying with Article 3.2 of Act no. 94/1996 will automatically receive income payment with 0% non-resident withholding tax. Certification is therefore requested from such customers for reporting purposes to ensure such entities are reported as Icelandic recipients instead of non-residents.
Relief at source
Documentation requirements
Customers are requested to provide the following documentation depending on their own residency and the residence of the underlying beneficial owners.
Clearstream Banking customers that are non-residents and holding for non-resident beneficial owners
No action is required by the Clearstream Banking customers, as Clearstream Banking applies by default the 0% non-resident withholding tax rate on interest and redemption payments from the above-mentioned debt securities.
Clearstream Banking customers that are Icelandic Banks complying with Article 3.2 of Act no. 94/1996
A One-Time Certificate for Icelandic Banks complying with Article 3.2 of Act no. 94/1996, which is valid until revoked.
Note: Such entities are considered as Icelandic tax withholding agents, implying that they must withhold the appropriate tax amounts from their respective clients, and report these amounts to the Icelandic Tax Authorities.
Deadlines for receipt of the required documentation by Clearstream Banking
Interest and redemption payments
Document | Deadline for receipt by |
One-Time Certificate for Icelandic Banks complying with Article 3.2 of Act no. 94/1996 | 10:00 CET, five business days before interest or redemption payment date. |
Important note
Clearstream Banking reminds customers that, in the absence of any certification from customers that are Icelandic Intermediary banks, Clearstream Banking will report to the RSK interest and redemption payments as being paid to non-resident customers holding for non-resident beneficial owners only.
Customers are also reminded that it is at all times the customer's full responsibility to ensure that final beneficial owners are eligible for the tax rates applied (including the Clearstream Banking default rates), and that all information provided by customers for tax purposes is complete, accurate and up to date. Furthermore, customers shall hold Clearstream Banking harmless of any loss or liability incurred by Clearstream Banking as a result of a breach of this responsibility.
Capital gains tax
Standard rate of capital gains tax | 0% |
There is no capital gains tax withheld through Clearstream Banking on non-taxable debt securities held in Clearstream Banking. Capital gains tax may however be payable on specific gains. Clearstream Banking does not assist in this regard. Please consult your tax advisor for further information.
Disclosure requirements
To comply with Icelandic disclosure and reporting requirements, Clearstream Banking is requestedto provide:
- on a monthly basis, the name and transaction details of the Clearstream Banking customer to the Icelandic tax authorities (RSK); and
- upon request, disclosure of the positions of the ultimate beneficial owners on a specified date in a given security to the tax or any other relevant authorities in Iceland.
Customers are kindly requested to refer to the CBL Disclosure Requirements - Iceland for full details of the disclosure requirements.
Impact on customers
In accordance with the amended tax procedure, customers are requested to comply with the above procedure effective as of 6 April 2020.
Further information
For further information, customers may contact the Clearstream Banking Tax Help Desk, Clearstream Banking Customer Service or their Relationship Officer.
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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.
2. Icelandic debt securities, falling under the scope of Article 1 of Act no. 39/2013, Article 1 of Act no. 53/2014 and Article 1 of Act no. 107/2015 are considered as non-taxable for non-resident beneficial owners.