Spain T2S: Tax impact on service offering

20.09.2021

Further to Announcements C20041, C20022, L20025 and C20051 informing customers of the activation of Clearstream Banking AG1 (CBF) direct access to the Spanish market (Iberclear) and the eligibility of Iberclear issued securities for settlement in T2S on 30 November 2020, LuxCSD2 informs customers that, effective

1 January 2022

enhancements of its systems will be implemented to allow a smoother tax instruction process and an accurate reporting to the Spanish tax authorities (STA).

Background

Since 30 November 2020, LuxCSD has been accessing Iberclear for settlement in T2S via CBF who has been acting as non-Spanish custodian for Spanish T2S eligible debt securities and equities (the “Spanish Securities”) processed via the direct link with Iberclear.

In its role as non-Spanish custodian being direct participant of Iberclear, CBF must comply with certain reporting obligations.

To fit the reporting requirements of the STA, Clearstream Banking had to enhance its own systems. As of 1 January 2022, the Beneficial Owner (BO) upload facility will no longer be available for immediate or quick refund and will be replaced with use of formatted SWIFT MT565 or Xact Web Portal instructions.

Impact on customers

1. Immediate and quick refund - Tax instructions by formatted SWIFT MT565 or Xact Web Portal for LuxCSD customers

As of 1 January 2022:

  • Customers applying for a quick refund on Spanish equities will have to provide LuxCSD with their breakdown of refund per requested tax rate either via a formatted SWIFT MT565 or Xact Web Portal, indicating:
    • Clearstream Customer account number;
    • ISIN code;
    • Corp ID;
    • Total instructed securities quantity;
    • Requested tax rate;

      and for each BO following details in BENODET sequence:
    • Name of the entity (field :95V::OWND//);
    • Two letter ISO country code of entity’s country of fiscal residence (field :94C:DOMI//);
    • BO securities quantity (field :36B::OWND//)
    • Clearstream reference of the COR (field :70E::CETI//)

The current process that consists of sending the breakdown as a password protected spreadsheet, by email with the password and the customer instruction sent separately via Xact Web Portal, CreationOnline (decommissioned on 31 December 2021) or SWIFT free-format message will no longer be applicable from 1 January 2022 onwards.

  • Customers applying for immediate or quick refund on domestic corporate bonds not subject to RD 1145/2011 will also have to disclose Spanish non-residents and Spanish residents via a formatted SWIFT MT565 or Xact Web Portal consisting in one breakdown per tax rate and residency status indicating:
    • Customer account number;
    • ISIN code;
    • Corp ID;
    • Total instructed securities quantity;
    • Requested tax rate;

      and for each non-Spanish BO following details in BENODET sequence:
    • Name of the entity (field :95V::OWND//);
    • Two letter ISO country code of entity’s country of fiscal residence (field :94C:DOMI//);
    • BO securities quantity (field :36B::OWND//);
    • Clearstream reference of the COR(field :70E::CETI//);

      and/or for each Spanish BO following details in BENODET sequence:
    • Full name and address of Spanish entity (field :95V::OWND//);
    • Spanish entity TIN (field :95S::ALTE//TXID/);
    • Two letter ISO country code of entity’s country of fiscal residence (field :94C:DOMI//);
    • BO securities quantity (field :36B::OWND//);
    • If the Spanish entity is the final BO or an Intermediary (field :70E::CETI// with either Final BO or Intermediary as value).

The current process that consists of submitting a BO list will no longer be applicable.

  • Customers applying for immediate or quick refund on domestic public and corporate bonds subject to RD 1145/2011 on behalf of Spanish residents will also have to disclose the Spanish residents via a formatted SWIFT MT565 or Xact Web Portal consisting in one breakdown per tax rate and residency status indicating:
    • Customer account number;
    • ISIN code;
    • Corp ID;
    • Full name and address of Spanish entity (field :95V::OWND//);
    • Spanish entity TIN (field :95S::ALTE//TXID/);
    • Two letter ISO country code of entity’s country of fiscal residence (field :94C:DOMI//);
    • BO securities quantity (field :36B::OWND//);
    • If the Spanish entity is the final BO or an Intermediary (field :70E::CETI// with either Final BO or Intermediary as value);
    • Total instructed securities quantity;
    • Requested tax rate.

The current process that consists of submitting, in addition to the other tax documentation and breakdowns, a BO list will no longer be applicable.

Instruction deadline

The deadlines to instruct remain unchanged and are available in the Market Taxation Guide – Spain.

However, the implementation of the breakdown instructions for quick refund on equities or for immediate/quick refund for Spanish residents on corporate bonds via MT565/Xact web portal will be effective only as of 1 January 2022.

Customers must ensure to prepare themselves and get ready to this way of instructing.

2. Pre-LMP standard refund – Upload of BO list for LuxCSD customers only

Customers applying for a standard refund of tax on income paid before 30 November 20203will have to provide LuxCSD with their breakdown of refund per event via the BO upload web portal.

The current process that consists of sending the breakdown as a password protected spreadsheet, by email with the password and the customer instruction sent separately via Xact Web Portal, CreationOnline (decommissioned on 31 December 2021) or SWIFT free-format message will no longer be applicable from 1 January 2022 onwards.

Further information

For further information, please contact the Clearstream Banking Tax Help Desk or Clearstream Banking Client Services or your Relationship Officer.

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1. Clearstream Banking AG (CBF), registered office at Mergenthalerallee 61, 65760 Eschborn, Germany, registered with the Commercial Register of the District Court in Frankfurt am Main, Germany, under number HRB 7500.

2. LuxCSD refers to LuxCSD S.A., registered office at 42, Avenue J.F. Kennedy, L-1855 Luxembourg, registered with the Luxembourg Trade and Companies Register under number B-154.449.

3. A standard refund on payments as of 30 November 2020 is not available. Clearstream Banking AG (CBF) is actively working on the reporting process to ensure a standard refund from 1 February 2022 onwards for payments of 2021. Further information on this standard refund process will be communicated when available.