Relief at source - eligibility, documentation, deadlines - Maltese debt securities
No relief at source from withholding tax on Maltese debt securities is available through LuxCSD, as interest is always paid gross by default, as it is assumed that customers do not hold Maltese securities on behalf of Maltese resident beneficial owners.
However, even if no withholding tax is withheld by default through LuxCSD on income distributions on debt securities, withholding tax may still be applicable for certain Maltese resident beneficial owners.
Therefore, if a customer nevertheless holds Maltese debt securities, on behalf of a Maltese tax resident beneficial owner, through LuxCSD, then the respective customer must, unrequested, inform LuxCSD, of the corresponding split between Maltese resident and non-resident beneficiaries and the relevant withholding tax rates to apply, in order to have the correct taxation applied for the Maltese resident beneficial owner.
In such a case, interest payments would be subject to withholding tax as detailed above.
Per payment disclosure requirement for taxable Maltese residents
Where a LuxCSD customer, holds on behalf of a Maltese tax resident beneficial owner (including themselves, if applicable), the customer undertakes to provide LuxCSD with the following per-payment disclosure instruction, in order to have the correct withholding tax applied:
- SWIFT MT568 Corporate Action Narrative message or MT599 free-format message, disclosing the total position of securities held by residents of Malta (which will be taxed at a withholding tax rate of 15%) and by non-resident beneficial owners (which will be taxed at a withholding tax rate of 0%).
Deadline
The require disclosure must be provided, at the latest three business days before each relevant coupon record date.
N.B.: A Maltese tax resident beneficial owner (or final beneficial owner whose tax-residence status changes to Maltese) who gives a late notice of such tax-residence status after the scheduled income event record date deadline must inform of this and file a mandatory tax income declaration to ratify its own individual position with the Maltese Tax Authorities after receipt of the income payment within statutory time-limits. Failure to do so may incur the imposition of penalties and interest on the actual tax due until final settlement.