Plus500 Ltd (LON:PLUS) has today announced via the London Stock Exchange the process by which the company will withhold tax on any dividends distributed, including with respect to the upcoming dividend, as set forth below.
On 25 February 2015, the Group announced a final dividend per share of $0.3001 ($34.5million) and a special dividend per share of $0.2657 ($30.5 million) (the “Dividend”), which will trade ex-dividend on 19 March 2015. Payment of the Dividend will be made on 15 May 2015 to shareholders on the register as at close of business on 20 March 2015.
Withholding Tax Treatment
As set out in the Group’s Admission Document, with respect to dividends sourced from regular earnings, under the Israeli Tax Ordinance and regulations (“ITO”), the current Israeli rate of withholding tax on dividends paid by an Israeli company is 30% for distributions to a “substantial shareholder” (in general, being someone who holds, directly or indirectly, by himself or together with others, at least 10% of one or more of the means of control in the company) and 25% with respect to distributions to all other holders of Ordinary Shares (“Withholding Tax”).
Entitlement of Non-Israeli Tax Residents to a Reduced Rate of Withholding Tax
In order for a holder of depositary interests in respect of ordinary shares (“DI holder”), which is not an Israeli tax resident, to benefit from a reduced withholding tax rate under a tax treaty between Israel and the country of his/her residence, such as the UK, a shareholder must apply to the Israel Tax Authority (the “ITA”) and obtain from the ITA a certificate for a reduced withholding tax rate as set in the applicable tax treaty (the “Certificate”).
In general, under the Double Taxation Treaty between Israel and the UK (the “UK Treaty”), a DI holder who is a British tax resident who holds less than 10% of the rights of the company and such dividend income is subject to tax in the UK and should be entitled to benefit from the UK Treaty, is entitled to a reduced withholding tax rate of 15% (the “Reduced Withholding Tax Rate”), provided the DI holder submits a duly issued Certificate prior to the payment date.
The same procedure was applied during the previous issue of dividend, the withholding of tax relating to which having been announced by Plus500 in September last year.
A DI holder may obtain a Certificate by submitting to the ITA a completed ITA Form A/114 (titled “Claim for Reduced Rate of Withholding Tax/Exemption from Withholding Tax in Israel for Non-Residents Form”) and any additional information or documents that may be requested by the ITA.
In order to assist Plus500’s investors who are residents of countries that have a tax treaty with Israel from the requirement to apply to the ITA with respect of obtaining a Certificate in order to benefit from the Reduced Withholding Tax Rate, Plus500 has applied to the ITA and obtained a special tax ruling (the “Tax Ruling”). In general, according to the Tax Ruling ESOP Management & Trust Services Ltd. was appointed to serve as a processing agent for the benefit of the investors (the “Agent”).
Accordingly, Plus500’s investors who are residents of countries that have a tax treaty with Israel may approach the Agent within the required time and provide the Agent with the required documentation and declarations as was set in the Tax Ruling (“Documentation and Declarations”) in order to be entitled to receive the Reduced Withholding Tax Rate from the dividend according the tax treaty between his/her country of residency and Israel.
A DI holder must present all the required Documentation and Declarations or valid Certificate to the Agent no later than 30 April 2015, in order to benefit from the Reduced Withholding Tax Rate. Accordingly, if all the required Documentation and Declarations or a valid Certificate is presented to the Agent before 30 April 2015, it is expected that Plus500, via the Agent, would be able to reimburse the difference between the applied Withholding Tax rate at the time of payment of the Dividend and the Reduced Withholding Tax Rate, if applicable.
If the Documentation and Declarations or the valid Certificate is not provided to the Agent by 30 April 2015, Plus500 would be required to withhold tax from the Dividend according to the rates set above without taking into account the Reduced Withholding Tax Rate.
Shareholders are advised to consult with their own personal tax and financial advisers as to the tax consequences resulting from their personal tax situation.
For the official announcement from the London Stock Exchange, click here.