On 26 July 2011 the Directors of Charter International plc (the "Company") declared an interim dividend of 8.0 pence per share which was paid on 2 September 2011 to all ordinary shareholders who were on the register of members on 5 August 2011.
The Company, as a Jersey incorporated Irish tax resident company, operates income access share dividend arrangements (the "IAS Arrangements").
Under the IAS Arrangements, ordinary shareholders in the Company are able to choose whether to receive dividends from a company tax resident in the Republic of Ireland (i.e. the Company) or to receive dividends under the IAS Arrangements from a company resident for tax purposes in the United Kingdom (i.e. Charter Limited, a wholly owned subsidiary of the Company).
The IAS Arrangements are constituted pursuant to trust arrangements under which Appleby Trust (Jersey) Limited (the "IAS Trustee") holds dividends received from Charter Limited on trust for those ordinary shareholders of the Company which have elected to receive dividends through the IAS Arrangements. On each dividend record date, those ordinary shareholders of the Company who have made a valid election will be entitled to receive from the IAS Trustee an amount equal to the dividend it would have received from the Company.
Please note that whilst it is currently intended that the IAS Arrangements will be operated, they may be suspended or terminated at any time and for any reason. If the IAS Arrangements are not operated, shareholders will receive dividends from the Company, regardless of whether they have made an election to receive dividends under the arrangements.
Making an IAS Election
To make an election to be eligible to receive your dividends from a UK source under the IAS Arrangements (an "IAS Election") please complete the IAS Election Form which can be downloaded from this page and return it to the Company's registrar, Computershare, at Computershare Investor Services (Jersey) Limited, Queensway House, Hilgrove Street, St Helier, Jersey JE1 1ES. It will be effective from the next dividend record date after which it is received. IAS Election Forms can also be obtained from Computershare, at Computershare Investor Services (Jersey) Limited, Queensway House, Hilgrove Street, St Helier, Jersey JE1 1ES.
If you require further details on making an IAS Election please contact Computershare by calling +44 (0) 870 707 4040.
An IAS Election will remain valid in respect of subsequent dividends announced or declared by the Company until revoked by returning a valid IAS Revocation From to Computershare at Computershare Investor Services (Jersey) Limited, Queensway House, Hilgrove Street, St Helier, Jersey JE1 1ES. An IAS Revocation Form (also available for download from this page or) may alternatively be obtained from Computershare at Computershare Investor Services(Jersey) Ltd, Queensway House, Hilgrove Street, St Helier, Jersey JE1 1ES.
An ordinary shareholder of the Company who does not make an IAS Election will receive his dividends from the Company, a company resident for tax purposes in the Republic of Ireland.
Ordinary shareholders of the Company who intend to receive their dividends from the Company should refer to the withholding tax declaration form and which (if they are eligible for an exemption from Irish dividend withholding tax) should be returned to Computershare at Computershare Investor Services (Jersey) Limited, Queensway House, Hilgrove Street, St Helier, Jersey JE1 1ES or Computershare Investor Services (Ireland) Limited, Heron House, Corrig Road, Sandyford Industrial Estate, Dublin 18, Ireland. Returning this form as mentioned above is necessary to enable shareholders who qualify for a relevant exemption to receive dividends from the Company without the imposition of Irish dividend withholding tax.
If you require further details on completing the withholding tax declaration form please contact Computershare on +44 (0) 870 707 4040.
Taxation
The following paragraphs are intended as a general guide only to certain limited aspects of the tax treatment of dividends under the laws of the jurisdictions described. They are not a substitute for detailed tax advice and, in the case of each jurisdiction discussed, are based on legislation in force, and on the published practice of the relevant tax authority, as at 21 February 2011. The summary below applies only to shareholders who hold their shares in the Company as an investment and who are the absolute beneficial owners of those shares. The summary below may not apply to certain special categories of shareholder, such as dealers in securities, collective investment schemes and insurance companies, or persons who have acquired those shares by virtue of an office or employment, or persons seeking to rely on a remittance basis of taxation.
If you are in any doubt about your tax position, you should consult your own professional adviser without delay.
Jersey taxation
The Company will be entitled to pay dividends to holders of the Company's ordinary shares without any withholding or deduction for or on account of Jersey tax. Holders of the Company's ordinary shares (other than residents of Jersey) will not be subject to any tax in Jersey in respect of dividends paid on such ordinary shares.
Irish taxation
Irish Dividend withholding tax ("DWT")
Dividends paid on the Company's ordinary shares
Dividends paid by the Company will generally be subject to DWT at the standard rate of income tax (currently 20 per cent.) unless the shareholder is within one of the categories of exempt shareholders referred to below. Where DWT applies, the Company is responsible for withholding DWT at source. For DWT purposes, a dividend includes any distribution made by the Company to its shareholders, including cash dividends, non-cash dividends and additional shares taken in lieu of a cash dividend.
DWT is not payable where an exemption applies provided that the Company has received all necessary documentation required by the relevant legislation from the shareholder prior to payment of the dividend.
Certain categories of Irish resident shareholders are entitled to an exemption from DWT, including (but not limited to) Irish resident companies, qualifying employee share ownership trusts, charities and pension funds. Except in very limited circumstances, distributions by the Company to Irish resident shareholders who are individuals are not exempt from DWT.
Certain non-Irish resident shareholders (both individual and corporate) are also entitled to an exemption from DWT. In particular, a non-Irish resident shareholder is not subject to DWT on dividends received from the Company if the shareholder is:
- an individual shareholder resident for tax purposes in either a member state of the EU (apart from the Republic of Ireland) or in a country with which the Republic of Ireland has a double tax treaty which is in force or which is signed and which will come into force once all ratification procedures have been completed (a "Relevant Territory") and the individual is neither resident nor ordinarily resident in the Republic of Ireland; or
- a corporate shareholder which is ultimately controlled, directly or indirectly, by persons resident in a Relevant Territory which persons are not themselves ultimately controlled, directly or indirectly by persons that are not resident in a Relevant Territory; or
- a corporate shareholder that is not ultimately controlled, directly or indirectly, by persons resident for tax purposes in the Republic of Ireland and which corporate shareholder is resident for tax purposes in a Relevant Territory; or
- a corporate shareholder whose principal class of shares (or those of its 75 per cent. parent) is substantially and regularly traded on a recognised stock exchange in either Ireland, a Relevant Territory or on an exchange approved by the Irish Minister for Finance; or
- a corporate shareholder that is wholly owned, directly or indirectly, by two or more companies the principal class of shares of each of which is substantially and regularly traded on a recognised stock exchange in either Ireland, a Relevant Territory or on an exchange approved by the Irish Minster for Finance.
and provided that, in all cases noted above, the shareholder has made the appropriate declaration to the Company prior to payment of the dividend.
With regard to dividends paid to non-resident pension funds, Irish Revenue have not published any specific guidance on qualification for exemption. However, where the pension fund is a body corporate, the exemptions outlined above will generally apply. For non-corporate pension funds, it is generally understood that Irish Revenue will apply the principles for mutual funds, as set out in their DWT guidance notes, to such pension funds. The guidance notes state that mutual funds may be regarded as being beneficially entitled to the distributions they receive on behalf of the unit holders, and Irish Revenue will not "look through" such funds. Thus, provided the non-resident mutual fund meets the necessary residence conditions, it will be entitled to exemption from DWT, subject to the normal declaration requirements. It is generally understood that the same treatment will be applied to non-resident non-corporate pension funds, and the residence of the trustees of the fund would determine whether exemption is available. Qualifying UK resident pension funds may alternatively be entitled to a specific exemption from dividend withholding tax under Article 11 (2) of the UK-Ireland Double Taxation Treaty.
Dividends paid under the IAS Arrangements
If a shareholder receives dividends under the IAS Arrangements, these dividends will be received from a UK resident company. Accordingly, no DWT will be levied on such dividends.
Irish tax on dividends
Dividends paid on the Company's ordinary shares
An Irish resident or ordinarily resident individual shareholder will be subject to Irish income tax on the gross dividend at this or her marginal rate of tax plus the health levy and the income levy. The gross dividend is the dividend received plus DWT withheld. Irish resident individual ordinary shareholders are generally entitled to credit for the DWT deducted against their income tax liability and to have refunded to them any amount by which DWT exceeds such income tax liability.
Irish resident corporate shareholders are generally exempt from Irish tax dividends received on the Company's ordinary shares. If an Irish resident corporate shareholder is a close company, however, it may, in certain circumstances, be liable to a 20 per cent investment income surcharge in respect of dividends received on the Company's ordinary shares.
Non-Irish resident shareholders are, unless entitled to exemption from DWT, liable to Irish income tax and the income levy on dividends received on the Company's ordinary shares. However, the DWT deducted by the Company generally discharges such liability to Irish income tax. Where a non-resident shareholder is entitled to exemption from DWT, then no Irish income tax or liability to the income levy arises and, where the Company has deducted DWT, a claim may be made for a refund of the DWT.
Dividends paid under the IAS Arrangements
An Irish resident or ordinarily resident shareholder who receives dividends paid under the IAS Arrangements will be taxed upon the cash dividend received at his or her marginal rate of tax plus the health levy and the income levy (in the case of individuals) or in the case of corporates at either 12.5 per cent. if certain conditions are met or 25 per cent. Irish resident taxpayers will not be entitled to claim a credit for, or repayment of, the tax credit attaching to such dividends.
UK taxation
The following summary of the UK tax treatment of dividends applies only to shareholders of the Company who are resident or ordinarily resident in the UK for taxation purposes.
UK taxation of dividends paid on the Company's ordinary shares and dividends paid under the IAS Arrangements
Withholding tax
As noted above, UK tax resident shareholders should, provided the appropriate declaration has been made to the Company, generally qualify for one of the exemptions from Irish dividend withholding tax.
If a shareholder receives dividends via the IAS Arrangements, such shareholder will be regarded as receiving dividends from a UK resident company. There will be no UK withholding tax on dividends paid under the IAS Arrangements.
Shareholders who are individuals
A shareholder who is an individual resident (for tax purposes) in the UK will be entitled to a tax credit equal to one-ninth of the amount of the dividend received from the Company (before deduction of Irish tax withheld, if any) or, as the case may be, of the amount of the dividend received under the IAS Arrangements. Such an individual will be taxable on the total of the dividend (before deduction of Irish tax withheld, if any) and the related tax credit (the "gross dividend"), which will be regarded as the top slice of the individual's income.
The tax credit will be treated as discharging the individual's liability to UK income tax in respect of the gross dividend, unless and except to the extent that the gross dividend falls above the threshold for the higher rate of income tax, in which case the individual will, to that extent, pay UK income tax at 32.5 per cent on the gross dividend, but less the related tax credit. So, for example, a dividend of £80 will carry a tax credit of £8.89 and the UK income tax payable by an individual liable to income tax at the higher rate would be 32.5 per cent of £88.89, namely £28.89, less the tax credit of £8.89, leaving a net tax charge of £20.
Shareholders should note that the UK Finance Act 2009 included legislation which provides for a new rate of income tax (the "additional rate") to apply, with effect from 6 April 2010, to taxable income above £150,000, and for dividends otherwise liable to tax at the additional rate to be taxable at the rate of 42.5%. Consequently, in the case of a shareholder who receives a dividend (whether from the Company or under the IAS Arrangements) after these provisions have come into effect and who is liable to income tax at the additional rate, the shareholder will, to the extent that the gross dividend falls above the threshold for the additional rate, be subject to tax on the gross dividend at the new rate of 42.5%, but less the related tax credit. As mentioned above, the gross dividend will for these purposes, be treated as the top slice of the shareholder's income. So, for example, a dividend of £80 will carry a tax credit of £8.89 and the UK income tax payable by an individual liable to income tax at the additional rate would be 42.5 per cent. of £88.89, namely £37.78, less the tax credit of £8.89, leaving a net income tax charge of £28.89.
Corporate shareholders
Subject to special rules for small companies, UK resident shareholders within the charge to UK corporation tax will be subject to UK corporation tax on the gross amount of any dividends paid by the Company (before deduction Irish tax withheld if any) or under the IAS Arrangements, unless the dividends fall within an exempt class and certain conditions are met. It is expected that the dividends paid by the Company and under the IAS Arrangements would generally be exempt from UK corporation tax.