Aberdeen e-alert - Issue 2014-07 | KPMG | LU

Aberdeen e-alert - Issue 2014-07

Aberdeen e-alert - Issue 2014-07

1000

Contact

Partner, Member of the Supervisory Board

KPMG in Luxembourg

Contact

Related content

Withholding tax reclaims filed in Austria by Luxembourg SICAVs

The present newsletter aims at clarifying the situation of withholding tax (“WHT”) reclaims filed in Austria based on the Luxembourg-Austria double tax treaty (“the DTT”) and domestic law.

 

Situation

1. DTT claims

WHT reclaims based on the DTT enable Luxembourg SICAVs to reduce their WHT rate from 25% to 15%.

In order to benefit from this reduction, some requirements have to be met by the SICAV, depending on its number of investors – amongst others (such as forms, certificate of residence of the claimant, dividend vouchers, etc):

  • If there are more than 100 investors, the claim should be filed by the SICAV and the percentage of non-resident investors should be disclosed by SICAV.
  • If there are more than 100 investors and that one single investor owns more than 10% of the shares of the SICAV (“Major Investor”), the claim should be filed by the SICAV and the below information has to be provided:
  1. the percentage of foreign investors of the SICAV, and
  2. a certificate of tax residence of the above mentioned Major Investor.
  • If the number of investors ranges between 10 and 99, the claim should be filed by the SICAV and non-resident investors have to be listed and should provide certificates of tax residence.
  • If there are less than 10 investors, the claim should not be filed by the SICAV, but by each investors individually.

 

2. WHT reclaims based on domestic law

Along with DTT claims, WHT reclaims based on domestic law can be filed in order for a SICAV to obtain a refund of the remaining 15% WHT.

However, at the beginning of September, the competent tax office Bruck-Eisenstadt-Oberwart (“The Tax Office”) rejected WHT reclaims based on domestic law filed by Luxembourg SICAVs (“The Claimants”) and continues rejecting subsequent domestic WHT reclaims.

The Claimants have legal personality and are considered as non-transparent for tax purposes. However, the Tax Office rejected the reclaims on the ground that SICAVs were equivalent to Austrian investment funds, which are necessarily tax transparent. Therefore, the Tax Office considered that the WHT reclaims should not have been filed by the claimants themselves, but by their investors.

Please note that KPMG is filing appeals against these decisions of rejection.

Indeed, KPMG takes the view that non-resident corporate funds (i.e. SICAVs) should rather be compared to Austrian corporations (which are non-transparent).

When filing the appeals, the Tax Office should be asked to put its decision on hold until the Supreme Administrative Court has issued a decision, since the latter in expected to clarify the regime of non-resident investment funds.

 

KPMG comments

As mentioned above, WHT reclaims filed in the future should be rejected by the Austrian tax authorities.

However, we would advise non-resident SICAVs to file WHT reclaims notwithstanding this fact and to file an appeal against the potential decision of rejection.

This would keep the claimants’ rights alive until the decision of the high administrative court is rendered.

 

For further information, please do not hesitate to contact us.

 

 

 

 

 

 

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough

Connect with us

 

Request for proposal

 

Submit