Poland: Update of the Polish CSD’s process in relation to taxation of Euro-denominated mortgage bonds income payments – Update

16.05.2024

Note: This Announcement, originally published on 23 February 2024 and updated on 8 April 2024, has been further updated to provide clients with additional details. Changes have been highlighted.

Clearstream Bankingwas informed by its local depository that the Polish CSD KDPW2 amended their process in relation to taxation applicable to income payments deriving from Polish Euro-denominated mortgage bonds.

Clearstream Banking informs clients that effective

immediately

any beneficial owner who – irrespective of its certification status – used to be paid gross on any income derived from its Polish Euro-denominated mortgage bonds, will be taxed at the highest applicable tax rate if its identity is undisclosed to KDPW when the income payment is made.

Impact on clients

Clients who wish to apply for relief at source (RAS) on taxable Polish Euro-denominated mortgage bonds on behalf of a final beneficial owner can do so through a designated RAS procedure.

A quick refund procedure is not available through Clearstream Banking.

Eligible beneficial owners

Polish residents:

  • Individuals are subject to a taxation rate of 19%
  • Legal entities are eligible to receive the income payment gross (0%)

Polish non-residents:

  • Individuals are eligible to receive the income payment gross (0%)
  • Legal entities are eligible to receive the income payment gross (0%)

Polish resident and non-resident individuals without full disclosure are subject to taxation at 19%.

Undisclosed beneficial owners will be subject to taxation at 20%.

Relief at source

To obtain RAS, clients must provide:

  • An original one-time certificate using the form attached at the bottom of this announcement and specifying in particular whether or not the client is the sole beneficial owner of all Polish Euro-denominated mortgage bond securities held in the account.
  • An original certificate of tax residence issued by the beneficial owner’s local tax authority in the relevant year. It must include the beneficial owner’s full name and address and remain valid until the end of the respective calendar year (applicable solely in relation to Polish non-residents).
  • Notarised and apostilled beneficial owner statements using either the “non-business entity” (individual) or the “business entity” (legal entity) template version.
  • A per-payment instruction per requested tax rate sent via Swift (formatted MT565) or Xact Web Portal indicating:
    • Clearstream Banking client account number
    • ISIN code
    • Record date
    • Payment date
    • Corporate ID
    • Total instructed securities quantity
    • Requested tax rate (field 92A::TAXB// for Swift users or Tax Rate field for Xact users)

      And for each relevant BO, the following details in BENODET sequence:
    • Full name and address of the BO (field :95V::OWND// for Swift users and Party in Beneficial owner details section for Xact users);
    • Two letter ISO country code of entity’s country of fiscal residence (field :94C::DOMI// for Swift users and Country of domicile in Beneficial Owner Details section for Xact users);
    • BO security quantity (field :36B::OWND// for Swift users and Quantity of securities owned in Beneficial owner details section for Xact users);
    • BO Tax ID (field 95S::ALTE//TXID/ for Swift users and BO TIN in Beneficial owner details section for Xact users);
    • For legal entity only: BO Registration No. and BO Registration Date (field 70E:CETI for Swift users and Narrative in the Beneficial Owner Details section for Xact users);
    • In case of instruction for undisclosed individuals (19%), only BO security quantity and wording “Undisclosed individuals” instead of full name and address are to be provided;
    • In case of redemption payment: Purchase Price to be provided (field 70E:CETI for Swift users and Narrative in the Beneficial Owner Details section for Xact users).

Deadlines

Relief at source

Deadline for receipt by Clearstream Banking

Certificates and per-payment instructions

By 10:00 AM CET on the day which is 7 working days before the applicable payment date.

Further information

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

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1. Clearstream Banking refers collectively to Clearstream Banking S.A., registered office at 42, avenue John F. Kennedy, L-1855 Luxembourg, and registered with the Luxembourg Trade and Companies Register under number B-9248, and Clearstream Banking AG (for Clearstream Banking AG clients using Creation accounts), registered office at Mergenthalerallee 61, 65760 Eschborn, Germany, and registered in Register B of the Amtsgericht Frankfurt am Main, Germany, under number HRB 7500.

2. « KDPW » stands for Krajowy Depozyt Papierów Wartościowych, which is a legal entity acting as central securities depository in Poland.