Relief at source - eligibility, documentation, deadlines - Spanish debt securities (securities held in CBF)
Who can obtain a relief at source?
Relief at source is not granted by Spanish legislation. In practice, an immediate refund takes place on the interest payment date however an exemption at source of withholding tax on interest from Spanish debt securities subject to Royal Decree 1145/2011 is available through LuxCSD by opening an X account (exempt account) allowing the gross payment of the coupon.
Eligibility criteria for the opening of a X account
All LuxCSD customers can open a segregated X account only if:
- It holds exclusively Spanish debt securities subject to Royal Decree 1145/2011;
and
- The securities are held on behalf of final beneficial owners non-resident in Spain for tax purposes.
Documentation requirements
To open the X account and consequently obtain gross payments on interest from Spanish debt securities subject to Royal Decree 1145/2011, customers must provide the following certification before the transfer of the impacted positions on the respective account:
- A One-Time Certificate for Spanish Debt Securities subject to Royal Decree 1145/2011- Tax exempt account (the OTC). It allows the holding of the securities for one or several beneficial owners that qualify for exemption from Spanish withholding tax on the Securities. This OTC will be considered as a standing instruction, unless stated otherwise by the customer, and all proceeds paid on this account will be made gross. The OTC is valid until revoked.
Deadlines for receipt of documents
In general, the required OTC must be received by LuxCSD before the transfer of the securities in the dedicated segregated account on which the customer will hold exclusively positions eligible for tax exemption. After the receipt and validation of the certification, the customer account will be flagged X (exempt) and all interest from eligible securities will be paid gross.
LuxCSD 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.
Important note:
It is the responsibility of the customers to ensure that they settle only Spanish Debt Securities subject to Royal Decree 1145/2011 in the X account and that they are eligible to the exemption.
- If LuxCSD is informed after record date that a beneficial owner has obtained a tax exemption to which he was not entitled, LuxCSD will not assist with paying the tax due to the respective Tax Authorities;
- If any other non-eligible securities are settled in the account resulting in an undue exemption, LuxCSD will immediately debit the tax amount at the default rate from the customer’s account if LuxCSD received the income proceeds net from Iberclear.