Posted: 14 Mar. 2022 5 min. read

Tax Appeals Court ruled on WHT refunds of cum/ex transactions


In its decision of 20 July 2021, RV/7102008/2017, the Tax Appeals Court dealt with the question of WHT refunds in the case of cum/ex transactions for a foreign company. The relevant WHT refund related to dividends from shares of listed domestic companies, which were purchased over the counter (in short: OTC). The focus was on those shares that are traded around the dividend record date. The question arose as to who - seller or buyer - was entitled to a refund of the WHT.

Facts of the case

The complainant is a United Arab Emirates-based corporation that was involved in the following share transactions: Shortly before the dividend record date, the complainant purchased shares with dividend entitlement over the counter (OTC). Due to OeKB's (Österreichische Kontrollbank) settlement practices for full settlement (t+3), the shares were deposited and booked in the buyer’s securities account three days later. Therefore, the deposit took place after the dividend record date (ex-dividend). The complainant received a settlement compensation amounting to the net dividend and applied for the WHT refund based on the applicable double taxation agreement.

Decision of the Tax Appeals Court

The Tax Appeals Court decided that a WHT refund is only possible if the dividend is attributable to the refund claimant for income tax purposes. In the Tax Appeals Court view, the deposit entry is decisive for the entitlement to a WHT refund. The time of the acquisition under civil law is not relevant. At the time the securities were deposited, they were already without dividend entitlement and the acquirer was only entitled to a compensation payment.

However, in this case the WHT was not refundable, as beneficial ownership had not yet been transferred to the acquirer. Only when the securities are deposited in the securities account of the acquirer, the acquirer has full authority to dispose the securities. Therefore, a securities transaction concluded cum dividend and delivered ex dividend does not give rise to a claim for a refund of the WHT levied on the original dividend. In its decision, the Tax Appeals Court follows the information of the Ministry of Finance published on 18 September 2014 on the refund of WHT on dividends regarding a taxpayer subject to limited tax liability. As there was no High Administrative Court decision on the legal question of beneficial ownership in cum/ex transactions, the Tax Appeals Court admitted an ordinary appeal.

Approach in practice

Securities transactions of taxpayers subject to limited tax liability around the dividend record date must be examined in detail according to the information of the Ministry of Finance and the respective Tax Appeals Court ruling. For those securities that have already been purchased on the dividend record date but have not yet been booked to the securities account of the taxpayer subject to limited tax liability, it is (still) not possible to request a WHT refund according to the current administrative practice.

The tax authorities continue the review of WHT refund requests by reconciling the WHT refund requests with the securities account statements. If the security in question is booked on the securities account of the refund claimant on the dividend record date, the WHT will be refunded.


In cum/ex transactions, shares are acquired shortly before the dividend record date with a dividend entitlement (cum dividend). In fact, they are delivered to the securities account of the buyer only after the dividend record date without dividend (ex-dividend). Instead of the actual dividend, a compensation payment is made to the buyer, which however, is not originally subject to WHT.

According to the decision of the Tax Appeals Court, the transition of beneficial ownership in OTC transactions occurs only upon delivery of the security to the buyer’s securities account. Due to the absence of income tax attributability of the security at the time of the dividend payment, a WHT refund is not possible. The current administrative practice was confirmed by the Tax Appeals Court. However, a final clarification of the underlying legal issue of beneficial ownership in cum/ex transactions remains to be seen, as an ordinary appeal has been admitted. Now, it is the turn of the Administrative High Court and it remains to be seen how the Administrative High Court will decide, as beneficial ownership of the asset (security) is not mandatory for the attribution of income.

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