HSBC 2012 Annual Report Download - page 526

HSBC HOLDINGS PLC
Shareholder Information (continued)
Taxation of shares and dividends > Cautionary statement
524
Inheritance tax
Shares or ADSs held by an individual whose
domicile is determined to be the US for the purposes
of the United States-United Kingdom Double
Taxation Convention relating to estate and gift taxes
(the ‘Estate Tax Treaty’) and who is not for such
purposes a national of the UK will not, provided
any US federal estate or gift tax chargeable has
been paid, be subject to UK inheritance tax on the
individual’s death or on a lifetime transfer of shares
or ADSs except in certain cases where the shares or
ADSs (i) are comprised in a settlement (unless, at the
time of the settlement, the settlor was domiciled in
the US and was not a national of the UK), (ii) is
part of the business property of a UK permanent
establishment of an enterprise, or (iii) pertains to
a UK fixed base of an individual used for the
performance of independent personal services. In
such cases, the Estate Tax Treaty generally provides
a credit against US federal tax liability for the
amount of any tax paid in the UK in a case where the
shares or ADSs are subject to both UK inheritance
tax and to US federal estate or gift tax.
Stamp duty and stamp duty reserve tax –
ADSs
If shares are transferred to a clearance service or
American Depositary Receipt (‘ADR’) issuer (which
will include a transfer of shares to the Depositary)
under the current HMRC practice UK stamp duty
and/or stamp duty reserve tax will be payable. The
stamp duty or stamp duty reserve tax is generally
payable on the consideration for the transfer and is
payable at the aggregate rate of 1.5%.
The amount of stamp duty reserve tax payable
on such a transfer will be reduced by any stamp duty
paid in connection with the same transfer.
No stamp duty will be payable on the transfer
of, or agreement to transfer, an ADS, provided that
the ADR and any separate instrument of transfer or
written agreement to transfer remain at all times
outside the UK, and provided further that any such
transfer or written agreement to transfer is not
executed in the UK. No stamp duty reserve tax will
be payable on a transfer of, or agreement to transfer,
an ADS effected by the transfer of an ADR.
US backup withholding tax and information
reporting
Distributions made on shares or ADSs and proceeds
from the sale of shares or ADSs that are paid within
the US, or through certain financial intermediaries to
US holders, are subject to information reporting and
may be subject to a US ‘backup’ withholding tax
unless, in general, the US holder complies with
certain certification procedures or is a corporation or
other person exempt from such withholding. Holders
that are not US persons generally are not subject to
information reporting or backup withholding tax,
but may be required to comply with applicable
certification procedures to establish that they are not
US persons in order to avoid the application of such
information reporting requirements or backup
withholding tax to payments received within the
US or through certain financial intermediaries.