Depositary receipts with underlying Russian shares

NSD discloses general tax breakdown to the tax agent on depositary receipts through International Clearing and Settlement Depositories (ICSDs) (foreign depositary/custodian) when paying out dividend income on depositary receipts with underlying Russian securities.

In accordance with articles 214.6 and 310.1 of the Russian Tax Code, to enable a Russian withholding agent to calculate and withhold taxes, the withholding agent must be provided with summary tax information, including the number of securities held, the jurisdiction of which the actual income recipient (beneficial owner/beneficiary) is a tax resident, and the grounds for application of tax exemptions or benefits.

To meet the requirements of tax disclosure procedure NSD’s clients which are the recipients of income in form of dividends on depositary receipts with underlying Russian shares could provide NSD (as a disclosing depositary) with documents proving tax residence of income beneficiaries as well as the right for tax exemptions and reliefs.

To get tax exemptions and reliefs at source the breakdown and documents should be provided to NSD before the date determined by NSD in accordance with terms of ICSDs (foreign depositary/custodian).

There is a possibility for tax recalculation (reclaim and refund) through NSD during the time determined by NSD in accordance with terms of ICSDs (foreign depositary/custodian) (approximately 25 working days since the date of dividends payment by a tax agent).

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