Purpose: stop full double taxation, standardise treatment of cross-border trading, prevent discrimination against UK business interest abroad, prevent tax evasion, encourage coperation between tax authorities
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WHT
levied by local tax authorities on income earned by non-residents, deducted at source
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Reclaim process
Issuing compnay instructs paying agent to pay dividend, agent pays net of WHT, agent pays WHT to local tax authority, client receives tax relief
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Asset servicing departments need the following details to make a tax reclaim
Tax certificate from client's local tax office, PoA from client, Tax questionnair including tax ID, market specific documents
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Impact on asset servicing
Complex, burdensome and often manual
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W8
Non-US
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W9
US citizens outside US
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Existing Clients with a Foreign Financial Institution
Less then $50,000 for an individual and less then $250,000 for an institution is checked by KYC but over $1,000,000 have more detailed checks
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US 302 Tax Law
Company redeemds its shares the share holder is liable to CGT, only stock = not subject to 302, only cash = subject to 302
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USA
30% WHT. W8 BEN = foreign ownership, W8 EXP = foreign government, W8 ECI = effectively controlling a business in USA, W8 IMY = flow through of a non-US intermediary
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Japan
15.315% WHT, relief at source
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Italy
Paid to tax authorities on 15th of the month following dividend payment, deadline to submit claim is 48 months from receipt of net, refund can take 10 years
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Other cards in this set
Card 2
Front
levied by local tax authorities on income earned by non-residents, deducted at source
Back
WHT
Card 3
Front
Issuing compnay instructs paying agent to pay dividend, agent pays net of WHT, agent pays WHT to local tax authority, client receives tax relief
Back
Card 4
Front
Tax certificate from client's local tax office, PoA from client, Tax questionnair including tax ID, market specific documents
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