Legislative change: nominee-registered shares Online meeting, 22 th - PowerPoint PPT Presentation

Legislative change: nominee-registered shares Online meeting, 22 th of April 2020

Agenda  The progress of the legislative change and its implementation  Updated publication schedule of upcoming guidance  OECD TRACE Schema  Investor Self Declaration (ISD) procedure  Questions and answers

Where are we now? 1.1.2021 1.1.2020 1.7.2020 31.1.2022 New tax-at- 50 % WHT for Registration to TRACE source rules unknown the Register of Reporting applicable to Finnish Authorised deadline for dividends paid residents Intermediaries dividends paid in 2021 applicable begins in 2021 Legislative 01 02 03 04 05 06 07 08 09 10 11 12 01 02 03 04 05 06 07 08 09 10 11 12 01 02 03 04 05 06 07 08 09 10 11 12 01 02 timeframe 2022 2021 2020 2019 Webinar The Tax 01 02 03 04 05 06 07 08 09 10 11 12 01 02 03 04 05 06 07 08 09 10 11 12 01 02 03 04 05 06 07 08 09 10 11 12 01 02 Administration's preliminary execution Tax Administration's Technical Reporting timeframe detailed guidance Register of Technical testing of Schema published on the registration Authorised TRACE Schema and responsibilities Intermediaries available for IT Tax Administration's of AI published at vero.fi Developers Decision on the ISD webpage procedure and related guidance

Publication schedule Upcoming guidance and instructions:  Investigating and identifying dividend beneficiaries and the Investor Self Declaration (ISD) procedure (official instructions)  Responsibilities and liabilities of an Authorised Intermediary (official instructions)

Published guidance and instructions  How to withhold tax on dividends paid to a Finnish tax resident shareholder when the underlying shares are nominee-registered  Application for refund of tax withheld and application for tax-at-source cards – Technical guidance – XML Schema – Example XML files – Available: IT developers - Specifications - Direct data transfers and other e-filings

TRACE XML Schema  OECD's version of the TRACE XML Schema has been published  Our version to be published in the upcoming months  Note for example the following: – Schema only used for dividend income paid by publicly listed companies to nonresidents – Adjustments made during the year of payment: applicable reasons for adjustment, such as tax-at-source card – Can also give a "0" declaration, i.e. no income paid or transferred – Making corrections:  can send in a correcting file where only some things are corrected  or "void" a previous file and send in a new one (replace) – Other info field ("Payment" element): safekeeping account number, decision number for advance ruling or tax-at-source, etc.

Investor Self-Declaration Procedure  Procedure to identify the nonresident dividend beneficiary – Based on Treaty Relief and Compliance Enhancement (TRACE) model – Legal base § 10 b of the Act on the Taxation of Nonresidents' Income  Finnish Tax Administration will release further instructions as to the: – contents and period of validity of the ISD – and what procedures must be followed when verifying the reliability of the ISD.  By following this guidance, the Authorised Intermediary will get legal certainty

Investor Self-Declaration - Contents and form  The declaration/information provided by the dividend beneficiary (an account holder) who is a customer of an AI, certifying that they are the beneficial owner in accordance with the applicable tax treaty. – contains the necessary information for imposing tax at source on dividend beneficiary – has to be positively affirmed – has to be documented but can be provided in any form  The contents must not be contradictory to the AI's other knowledge and information of the dividend beneficiary – reasonable measures for the ISD based on procedure will be described in the guidance  Separate ISD's for individuals and for entities – required information described in the FTA guidance

ISD - Reasonable measures  AI must use reasonable measures to ensure that the information contained in the ISD is correct for granting tax treaty benefits – when the beneficiary positively affirms the ISD, the AI must confirm the reasonableness of ISD based on the information it has in it possession or obtains  incl. any documentation collected pursuant to AML/KYC/FATCA/CRS/DAC2 procedures – ISD will remain valid until the last day of the fifth calendar year following the year in which the ISD was signed  unless there is a change in the circumstances  note: in situations where WHT tax rate is less than 15 % and the dividend amount is not minor, reasonableness test has to be performed before granting treaty benefits

Frequently asked questions on ISD 1. Can we use the ISD form in the OECD TRACE Implementation Package? 2. Can treaty benefits be granted based on other documentation than the ISD form? 3. Is the ISD only to be used by beneficial owners that are requesting reduced tax rate based on tax treaty or also in other situations? 4. Can the ISD be signed by the AI on behalf of the beneficiary? 5. What documentation requirements in addition to the ISD are there for withholding according to tax treaty? 6. Does the AI need to verify the information contained in the ISD like the TIN or investor type etc.?

Questions?

Webinar 13 th of May, 2:30 pm  This is the last online meeting this Spring  Save the date, in May we will be hosting a webinar!  Topics of the webinar: – Rights and responsibilities of an authorised intermediary – Registration into the Register of Authorised Intermediaries – Digitalisation of tax-at-source applications and updates to existing paper forms  More detailed information on how to join will be published on our Financial sector page

Any other questions? Send any further questions to financialsector@vero.fi