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Changes in withholding tax practices in dividend payments for nominee-registered shares in 2020

This information is directed to non-Finnish resident shareholders of Sampo plc. It is published to inform the shareholders about the changes in the taxation of dividends in 2020.

Taxation of dividends in 2020

Withholding tax lower than 15% no longer available at source for nominee-registered shares

Dividend recipients resident in countries which have a tax treaty with Finland providing a dividend withholding tax rate lower than 15% may earlier have benefited from the reduced (or even zero) withholding tax already at source by disclosing their identity and residence information to the Finnish securities account operator prior to the dividend payment.  This benefit at source cannot be applied by Sampo in its dividend distributions in 2020.

The change in the practice is due to the Finnish Tax Administration’s requirement, among other things, that the identification details of the dividend recipient are to be re-obtained and the recipient's status as a beneficial owner of the dividend is to be specifically ascertained in connection with each dividend payment. In discussions with account operators, Sampo has understood that in practice it is not possible to comply with the above requirements during the dividend payment process, and thus the tax treaty benefits cannot be granted at source in 2020.

Application of withholding tax at 15% on dividends paid to nominee-registered shares (simplified procedure)

Even though the tax treaty based withholding tax rates lower than 15% cannot be applied at source in 2020, a rate of 15% for dividends paid to recipients resident in tax treaty jurisdictions (or at a higher treaty rate applicable to certain countries) is still available if the legal requirements for so-called "simplified procedure" for nominee-registered shares are met. Such requirements include, among other things, that the Finnish account operator and the foreign custodian of the investor have concluded a qualifying agreement, and that the custodian confirms that the final recipient is entitled to tax treaty benefits concerning dividends. In the simplified procedure, the identity of the dividend recipient is not required to be disclosed to Finnish account operator prior to the dividend payment (only the residence country needs to be disclosed).

However, if the legal requirements for the simplified procedure are not met (e.g. in case the foreign custodian does not ascertain the dividend recipient's entitlement to tax treaty benefits upon the dividend payment), Sampo may need to apply the general withholding tax rate of 30%.

Obtaining refund of withholding tax

If the dividend recipient considers itself to be entitled to dividend withholding tax at a rate lower than applied at the time of the dividend distribution, the dividend recipient may apply for a refund. The application can be made with the recipient's Finnish account operator through the chain of foreign custodians during the year of the dividend payment (quick refund) and after that (for a period of three years) directly with the Finnish Tax Administration. The shareholders shall contact their custodian for more information or visit the webpage of Finnish Tax Administration

Additional information from the Finnish Tax Administration

The Finnish Tax Administration has published guidance on the changes to withholding taxation applicable to nominee-registered shares: Information on changes.  Further information on withholding taxation can be found here: Information on withholding taxation.

Additional information on withholding tax matters can be obtained from the Finnish Tax Administration:

  • website
  • telephone for businesses: +358 (0)29 497 051
  • telephone for individuals: +358 (0)29 497 024
Updated 1 Jun 2020