Spain: Enhanced tax service for debt securities subject to Royal Decree 1145/2011
Clearstream Banking1 would like to inform customers that effective
14 June 2021
they will have the possibility to settle on a segregated exempt account with Clearstream Banking in order to benefit from the gross coupon payment service.
Further to Spanish CSD Iberclear’s enhancement of their settlement system procedure, income proceeds due on debt securities subject to Royal Decree 1145/2011 that are held on a segregated exempt account, exclusively opened for that purpose, and that have been well documented as tax-exempted (for non-resident in Spain for tax purposes), will be distributed gross.
- Spanish debt securities subject to Royal Decree 1154/2011;
- Final beneficial owner non-resident in Spain for tax purposes.
Impact on customers
The gross coupon payment service is an additional service, in that it complements Clearstream Banking’s existing tax service offering.
The immediate tax refund service in place today therefore remains available and unchanged.
By holding their securities in a segregated exempt account (“exempt account” is also referred to as “X” account) with Clearstream Banking, entitled account holders will receive their income proceeds gross, on payment date and no longer need to request immediate refund.
Customers willing to benefit from that service should follow actions described below:
- Submit account opening request as per standard procedure as described in the Customer Handbook.
Note that for customers of Clearstream Banking AG, segregated exempt account shall be opened exclusively as a sub-account of existing account.
- Comply with requested tax documentation, in line with the relevant tax procedure.
Customers that are willing to use the exempt account as from 14 June 2021, are requested to submit their account opening demand, and associated documentation, by 28 May 2021 at the latest. Any submission received after that deadline will be treated on a best effort basis.
In general, Clearstream Banking highly recommends for customers to initiate the account opening request at least two weeks in advance before the intended effective use of the exempt account
Note: It is not possible to change the status of an existing account into an exempt account. Exempt status is only available to newly opened accounts.
Procedure for domestic counterparties
There is no change to the Standard Settlement Instructions (SSI).
Instruction specifications for Xact via SWIFT, Xact File Transfer, CreationOnline and Xact Web Portal remain unchanged.
Customers willing to benefit from the gross coupon payment service via their exempt accounts are required to comply with the relevant tax certification procedure.
For a detailed description of the applicable tax procedure, customers should refer to Announcement L21025.
Transfers to the exempt account should be instructed no earlier than 14 June 2021 and with the intended settlement date of 14 June 2021 at the earliest.
In order to allow for a smooth transition and avoid any tax reconciliation issues, customers are requested to not send instructions onto the exempt account before that date.
By transferring Spanish securities onto an exempt account or X account, Clearstream Banking customers acknowledge and commit that:
- The “exempt account” is used exclusively to hold debt securities that are eligible for gross coupon payment, in line with conditions set forth by Royal Decree 1145/2011 and Article 44 of Royal Decree 1065/2007.
- Updated documentation in place with Clearstream Banking to evidence the eligibility of the position held on a X account is maintained and up-to-date at all times.
- Clearstream Banking will bear no responsibility for incorrect tax applied due to the balance held on an “exempt account” that would not comply with the above eligible criteria.
Each customer hereby acknowledges and agrees to indemnify and hold harmless Clearstream Banking from any and all expenses (including attorney fees), penalties, loss, damages, judgments, suits or any other liabilities whatsoever incurred by Clearstream Banking due to the fact that it will have provided Clearstream Banking with incomplete, untrue, misleading or inaccurate information, will have misused the exempt account or will not have provided Clearstream Banking with the information requested in a timely manner.
The Market Link Guide - Spain will be amended accordingly.
For further information, customers may contact Clearstream Banking Client Services or their Relationship Officer.
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, registered office at 61, Mergenthalerallee, 65760 Eschborn, Germany and registered in Register B of the Amtsgericht Frankfurt am Main, Germany under number HRB 7500.