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HMRC internal manual

Stamp Taxes on Shares Manual

Depositary receipt and clearance services: scope of 1.5 per cent charge: Stamp Duty Reserve Tax - overseas branch register

Where a company incorporated in the United Kingdom, keeps or maintains a share register in an overseas branch register in certain prescribed countries listed in CA2006/S129 (2), any securities transferred from the overseas branch register (on sale or otherwise than on sale) to a depositary receipt issuer or clearance service (located within or outside of the European Union (EU) or European Economic Area (EEA)) are, unlike stamp duty, chargeable to 1.5 per cent stamp duty reserve tax (SDRT) by virtue of FA86/S99 (10).

HM Revenue & Customs (HMRC) do not, however, seek to collect 1.5 per cent SDRT on any securities that are issued by an UK incorporated company from an overseas branch register in a country listed in CA2006/S129 (2) that are deposited with a depositary receipt issuer (or its nominee) or clearance service (or its nominee) located anywhere in the world. This is because following the decisions by the European Court of Justice (ECJ) in October 2009 in the case of HSBC Holdings PLC and Vidacos Nominees Ltd v Commissioners for HM Revenue & Customs(C569/07), and the First-Tier Tribunal (Tax Chamber) in March 2012 in the case of HSBC Holdings PLC and the Bank of New York Mellon Corporation v Commissioners for HM Revenue & Customs (TC/2009/16584), HMRC accept that the charging of 1.5 per cent on share issues is incompatible with European Union law.