When dividends and interest are paid on foreign securities, foreign tax is generally withheld from the payment by the paying agent and paid to the foreign taxing authority. Generally, the paying agent withholds an amount of tax determined by statute (statutory rate) in the local jurisdiction where the security is issued. Often, investors are resident for tax purposes in a jurisdiction that has a tax treaty with the country of issuance of a security. For qualifying types of investors, these treaties often allow for a withholding rate less than the statutory rate.
DTC TaxReliefsm (TaxRelief) makes it possible for qualifying beneficial owners to obtain tax relief "at-source" or via an accelerated refund on certain foreign issues as a result of tax relief arrangements established with issuers, agents or the tax authorities of various countries. Obtaining benefits at-source means investors receive the income payment with the most favorable rate of tax for which they qualify deducted at the same time. The alternative to "at-source" relief would be to be taxed at the highest rate and to have to file a tax reclaim to receive the amount overpaid by the beneficial owner. TaxRelief offers an efficient alternative to manually filing error-prone hardcopy reclaim forms.
TaxRelief supports all international DTC-eligible security types including American Depositary Receipts ("ADRs"), global shares, equities and fixed income securities for which arrangements have been established with either the respective countries’ tax authorities, agents or issuers.