Standard refund - eligibility, documentation, deadlines - Italian equities
Who can apply for a standard refund?
A standard refund of withholding tax on dividends from Italian equities is available through LuxCSD for beneficial owners who did not obtain relief at source or a quick refund, as follows:
| Eligible beneficial owners | Effective rate of tax after refund | Tax refund available a |
Residents of a Double Taxation Treaty (DTT) country | Tax treaty rate or 26% b, whichever is lower | 26% b minus the tax treaty rate c |
EU/EEA corporations | 1.20% d | 24.80% |
EU/EEA pension funds | 11% | 15% |
Supranational organisations recognised as such by Italian law | 0% | 26% b |
a. Expressed as a percentage of the gross dividend amount.
b. Before 1 January 2012, the rate was 27% and, between 1 January 2012 and 30 June 2014, the rate was 20%.
c. Amount of relief will be 0% if the DTT rate exceeds 26%.
d. 1.375% until 31 December 2016, 1.20% as of 1 January 2017.
Important note:
Customers are reminded that all standard refund applications depend on the final approval of the Italian Tax Authorities.
Furthermore, customers should be aware that the Italian Tax Authorities' requirements and interpretation of the applicable laws may be subject to changes. In order to safeguard the interests of our customers and to avoid rejections of withholding tax reclaims, customers are strongly recommended to certify their accounts for tax exemption at source, or via quick refund, and to avoid the standard refund applications. LuxCSD cannot accept responsibility for the acceptance or non-acceptance of tax reclaims by the Italian Tax Authorities.
Documentation requirements
Documentation requirements are the same for all types of eligible beneficial owner, as follows:
- Domanda di Rimborso / Refund Claim;
- Power of Attorney (if the tax forms are not signed by the final beneficial owner);
- Power of Attorney from Final Beneficial Owner to LuxCSD;
- Credit Advice;
- Letter of Request to LuxCSD for Reclaim of Italian Withholding Tax.
Form descriptions are presented according to the procedures available for relief and/or reclaim of withholding tax on income from Italian equities.
Deadline for receipt of documents
The statutory deadline for reclaiming withholding tax using the standard refund procedure is four years after the dividend payment date.
The deadline by which LuxCSD must receive the documentation for an application is at the latest three months before the statutory deadline.
Fees charged for a tax reclaim
In addition to the standard fee charged by LuxCSD per reclaim form (as detailed in the LuxCSD International Fee Schedule), the fees charged by the local custodian for handling tax refund requests for a customer will be passed on by LuxCSD to the customer. Currently, a fee of EUR 10 is charged per tax refund file.
When are refunds received?
There is no estimated time for receiving a standard refund: it can vary depending on when the application is filed and on the complexity of the information supplied on the reclaim form. However, according to LuxCSDs experience in the market, refunds may be considerably delayed before the budgeted funds become available, possibly up to several years from the date of receipt by the Italian Tax Authorities.
In the event of a delayed tax refund, the Italian Ministry of Finance grants compensation interest on the amounts to be refunded, as explained under General information.
Proactive Tax Reclaim Service for Italian equities
LuxCSD offers a proactive service for completing applications for refunds of Italian withholding tax on dividend payments by means of reclaim form Domanda di Rimborso. The improvements of this service are as follows:
- LuxCSD will provide additional assistance to customers in completing the tax reclaim form.
- The time between the initial request for the service and the submission of the refund package by LuxCSD to the Italian Tax Authorities is reduced.
Description of the process
The customers initiates the process by sending a message via an authenticated means of communication or an original letter to the following address:
Clearstream Operations Prague s.r.o.
Attn: OTR - Tax Reclaim Services
Futurama Business Park Building B
Sokolovska 662/136b
18600 Prague 8
Czech Republic
with the following information for each reclaim application (for which a separate Domanda di Rimborso must be completed):
- The customer’s account number with LuxCSD;
- For individual beneficial owners:
- Name, date and place of birth;
- Full address;
- Local Tax Identification Number (TIN).
- For legal entity beneficial owners:
- Name and full address (registered seat);
- Local Tax Identification Number (TIN).
- For legal representatives:
- Name, date and place of birth;
- Full address;
- Local Tax Identification Number (TIN).
- The name, contact details and address of the person in the customer's organisation to whom the Domanda di Rimborso should be returned.
and, for each event for which a refund is being reclaimed:
- The ISIN code, the common code or the ABI code;
- The fiscal year and the dividend value date for the reclaim application;
- Nominal value of the security on which the reclaim is based;
- The tax rate required to be applied as per the Double Taxation Treaty or Italian legislation (treaty rate, 11%, 1.375%, 0%).
Completion of original certificates
Upon receipt of the above information, LuxCSD produces the Domanda di Rimborso and sends it to the customer for checking and confirmation that all details are correct.
The form is addressed to the attention of the person identified in the original customer request.
Customer agreement
The Domanda di Rimborso is sent to the customer to obtain agreement on the details included in the form and to have it signed by all relevant parties.
Upon receipt of the form, the customer does the following:
- Have it signed by the final beneficial owner. Where the customer is also the final beneficial owner, the customer should sign it as the beneficial owner. If the final beneficial owner is a legal entity, the stamp of the company must be next to the signature. Electronic signatures are not accepted.
- Ensure that the beneficial owner submits the Domanda di Rimborso to its local tax authorities in order to have the section “Attestation of the Local Tax Authorities” signed and stamped to certify the beneficial owner's country of residence. The beneficial owner then returns the completed form to the customer.
- Upon receiving it back from the beneficial owner, the customer must check all the data, fill in the full name and address, and stamp and sign the “Banker’s Affidavit" section.
- Return the completed Domanda di Rimborso, duly signed, to LuxCSD's Tax Services Department together with the following documents:
- If the final beneficial owner is a physical person, a copy of his Identification Card or Passport;
- If the final beneficial owner is a legal entity, the legal representative’s Identification Card or Passport;
- The Power of Attorney from the Final Beneficial Owner to LuxCSD;
- The Credit Advice from each intermediary;
- If the Domanda di Rimborso it is not signed by the final beneficial owner, the Power of Attorney from the final beneficial owner to the entity signing the tax form.
Note: Customers must warrant the completeness and accuracy of the information they supply to LuxCSD. LuxCSD is under no obligation to carry out any investigation in respect of such information.
Submission of the reclaim
Upon receipt of the Domanda di Rimborso, LuxCSD does the following:
- Verify that the form fulfils all the necessary requirements;
- Send it to the Italian Tax Authorities;
- Retain a copy for its records.
After the Italian Tax Authorities have paid the amount reclaimed to the depository, the refund is credited to the LuxCSD account specified in the customer's original request.
Fee structure
The fee for the Proactive Tax Reclaim Service is EUR 100 for the production of each Domanda di Rimborso.