Recital (23)

Furthermore, in the case of financial arrangements, it is understood that the ownership of the securities is not transferred to the buyer or borrower if the economic risk remains with the seller or lender of the securities through any legal transactions such as securities lending, options or futures contracts. It should be possible for any arrangement under which dividends are compensated between the parties concerned to be considered as a financial arrangement. The parties concerned are not always compensated in cash, but can also be compensated in more indirect ways, such as through differences in price of securities or derivatives. Information on financial arrangements is necessary for tax authorities to fight tax fraud and tax abuse. When such information is reported directly, it should only be required from certified financial intermediaries that, due to their position within the chain, might have been directly engaged in the relevant financial arrangement, which will be the case for the certified financial intermediaries that request relief. When such information is reported indirectly, the information on financial arrangements should be reported by the certified financial intermediary of the registered owner. In such cases, the information should be reported along the security payment chain in sequential order with the effect that it ultimately reaches the withholding tax agent or a designated certified financial intermediary. That means that other reporting certified financial intermediaries need to transmit the information on those financial arrangements to the withholding tax agent or a designated certified financial intermediary, even if those reporting certified financial intermediaries are not directly engaged in the relevant financial arrangement. Reporting on financial arrangements should not be required in the case of bonds and interest payments.