Under the terms of the recommended cash offer from Telefónica, S.A., shareholders were given the option of receiving £2 per O2 plc share in cash, or a loan note alternative, as part or all of the consideration for selling their shares in O2 plc
Unless you take advantage of the exemption described below, Spanish tax at the rate of 18 per cent. will be withheld from any interest payment in respect of the loan notes. Under Spanish Law, you can receive the interest free of any such withholding if you provide Equiniti, as registrars and agents for Telefónica, with a certificate from your tax inspector or local tax office stating that you are resident for tax purposes in the United Kingdom. If you do not take advantage of this exemption, the Spanish tax withheld will be a real cost, as you are unlikely to be able to obtain relief for it against your liability to UK tax on the interest.
Available for download is a proforma letter which requests a tax residency certificate. You should complete this letter each tax year and insert your details on the proforma certificate, including your Account Number as printed on your loan note certificate(s) and send the letter and the proforma certificate to your tax inspector or local tax office. (If you do not know your tax office address HM Revenue & Customs (HMRC) helpline will be able to help you on 0845 0703703. You will need to provide them with your National Insurance Number). When you receive the tax residency certificate back from HMRC you should send it as soon as possible to Equiniti Limited, Aspect House, Spencer Road, Lancing, West Sussex, BN99 6DA.
In order to take advantage of this exemption you must provide your tax residency certificate to Equiniti before 31 May 2008 to ensure that no Spanish tax is withheld from the interest payable on 30 June 2008 and also interest payable on 31 December 2008. If the form is received after 31 May 2008, this will only ensure that no Spanish tax is withheld from the interest payable on 31 December 2008. You must also provide Equiniti with a new certificate before 31 May each calendar year for as long as you hold the loan notes as each certificate is only valid for one year. It is therefore recommended that you keep a copy of the proforma in a safe place, so that you can use it in future years.
If Equiniti have not received your valid tax residency certificate by 31 May, Spanish tax will be withheld from your June interest payment. It is possible to obtain a refund of Spanish tax withheld for up to four years after the date of the interest payment but to do this it is necessary to obtain the tax residency certificate (as before) and send it to the Spanish tax authorities. This is a more onerous process and it is strongly recommended that you obtain exemption from the withholding rather than reclaiming the tax subsequently.
Telefónica Europe Group Secretariat
April 2008
Download Spanish withholding tax help notes.
