Tax

Your Tax Obligations as a Unitholder of Digital CORE REIT

As a unitholder of Digital CORE REIT ("Unitholder"), you are required to provide certain documentation to the United States Internal Revenue Service ("IRS"). This is to allow the IRS to establish if you are eligible for exemption from US withholding tax under the United States Internal Revenue Code of 1986 as amended (the "IRC"), which includes the United States Foreign Account Tax Compliance Act ("FATCA"), on certain income derived by Digital CORE REIT from the United States ("US"), in which you are entitled to as a Unitholder.

Specifically, Unitholders that are not US persons must establish their status for FATCA purposes and their eligibility for an exemption from US withholding tax on distributions from Digital CORE REIT attributable to certain interest receipts from the US by providing an applicable US IRS Form W-8 (or "US Tax Form") and other documentation or information that may be requested from time to time.

For non-US Unitholders who are individuals and whose investment in units of Digital CORE REIT are not effectively connected with their conduct of a trade or business in the US, the applicable Form W-8 is an IRS Form W-8BEN. The IRS Form W-8BEN is only for individuals and will not be accepted if submitted by a non-individual, for example, from a corporation or any other type of entity.

Unitholders must also provide updates of any changes to their status for FATCA purposes, including information relating to their name, address, citizenship, personal identification number or tax identification number, tax residencies, and tax status.

A Form W-8 will generally remain valid from the date signed until the last day of the third succeeding calendar year. For example, a form signed between 1 January 2022 to 31 December 2022 will remain valid through 31 December 2025. All US Tax Forms cease to be valid upon any change in circumstance that renders a previously submitted US Tax Form inaccurate (in which case, a new US Tax Form will have to be submitted within 30 days).

If a Unitholder fails to provide or update relevant information necessary for compliance with US tax withholding requirements, including FATCA, or provide inaccurate, incomplete or false information or where a US Tax Form previously returned by that Unitholder ceases to remain valid, amounts payable by Digital CORE REIT to such Unitholder may be subject to deduction or withholding in accordance with US tax law and any intergovernmental agreements. Accordingly, the distributions receivable by such Unitholder may be reduced in these circumstances.

Boardroom Corporate & Advisory Services Pte. Ltd, the Unit Registrar of Digital CORE REIT, will dispatch US Tax Forms to each non-US Unitholder that does not have valid documentation on file prior to Digital CORE REIT making any distributions to Unitholders. The relevant US tax forms may also be downloaded from the sub-pages below or from the US IRS website at http://www.irs.gov.

How to file for tax exemption:

Step 1: Fill out forms

Step 2: For assistance, please contact us via digitalcorereit@boardroomlimited.com or call (65) 6230 9682 during office hours from Monday to Friday, excluding public holidays.

Step 3: Mail forms to Unit Registrar before the time stipulated by Unit Registrar.

Unit Registrar
Boardroom Corporate & Advisory Services Pte. Ltd.
1 Harbourfront Avenue
Keppel Bay Tower, #14-03/07
Singapore 098632

Unitholders who do not submit the required US IRS tax forms will be subject to US withholding tax on distributions payment when due to them and may not receive the full amount of their entitlement to distributions.

Restriction on Ownership of Units

Unitholders of Digital Core REIT and all other persons are prohibited from directly or indirectly owning in excess of 9.8% of the outstanding Units, subject to any increase or waiver pursuant to the terms of the Trust Deed and on the recommendation of the Manager. This prohibition is intended to preserve the US REIT status of the Parent US REIT and facilitate the availability of the Portfolio Interest Exemption.

The Trust Deed provides that Units held directly or indirectly by any person in excess of the Unit Ownership Limit will be automatically forfeited and held by the Trustee (“Automatic Forfeiture”). While forfeited Units are held by the Trustee, all rights attributable to those Units, such as the right to vote and the right to receive distributions, will be held by the Trustee; the Unitholder from whom the Units are forfeited shall have no right to vote or receive distributions arising from such Units.

The Trustee (on the recommendation of the Manager) will have the right and power to dispose of Units subject to Automatic Forfeiture, and upon such disposal, the Unitholder from whom the Units are forfeited will receive the proceeds (net of any commissions and expenses) from the disposition, but not in excess of (a) the price paid by such Unitholder for the forfeited Units or (b) if such Unitholder did not give value for the forfeited Units in connection with the event causing the Units to be forfeited (e.g., in the case of a gift, a non-pro rata Unit buy-back, a non-pro rata Unit consolidation or other corporate action where no acquisition or transfer of Units by a Unitholder takes place but has the result of increasing a Unitholder’s proportionate unitholdings), the market price of the Units on the day of the event causing the Automatic Forfeiture, in each case less certain distributions received by the Unitholder; any excess shall be donated by the Trustee to a charitable, philanthropic or benevolent organisation or purpose nominated by the Manager. If, prior to the discovery by the Trustee that Units are subject to Automatic Forfeiture, such Units are sold by the Unitholder, then such Units shall be deemed to have been sold on behalf of the Trustee and to the extent that such Unitholder received an amount in excess of the amount which it would otherwise have been entitled to, such excess shall be paid to the Trustee upon demand to be donated to a charitable, philanthropic or benevolent organisation or purpose nominated by the Manager.

For the avoidance of doubt, the Automatic Forfeiture is effective automatically, whether or not the Trustee or the Manager is aware of the change in ownership or aware of the fact that the Unit Ownership Limit has been breached and without any requirement for notice by the Trustee or the Manager. Unitholders are advised to manage their interests in the Units so as not to breach the Unit Ownership Limit and trigger the Automatic Forfeiture.

Qualified Notice On Non-Applicability of US Withholding Tax Under Section 1446(f) and 1446(a) of United States Internal Revenue Code to Non-US Unitholders of Digital Core REIT

The Section 1446(f) withholding tax does not apply because Digital Core REIT is a publicly traded partnership (“PTP”) that has operated, and intends to continue to operate, in such a manner so as not to be treated as engaging in a US trade or business. 

In relation to the final regulations released by the US Internal Revenue Service ("IRS") under Internal Revenue Code (the "Code") Section 1446(f) in 2020 is not applicable to the sale or transfer of Digital Core REIT units.

Section 1446(f) of the Code provides that if a non-US person transfers an interest in a partnership and if any portion of the gain on such transfer is effectively connected with the conduct of a US trade or business, the transferee must withhold 10% of the amount realised upon the transfer or sale. Under the final regulations of Section 1446(f), brokers who effect a transfer of an interest in a PTP on behalf of a non-US person and pay the amount realised to a non-US transferor who is their customer must generally withhold a tax equal to 10% of the amount realised on such transfers beginning 1 January 2023.

Digital Core REIT has issued a Qualified Notice to certify that Digital Core REIT was not engaged in a trade or business within the US at any time during its taxable year through the “PTP designated date” within the meaning of the US withholding tax under the final regulations of Section 1446(f) of the US Internal Revenue Code of 1986, as amended.

Accordingly, and to reiterate, the Section 1446(f) withholding tax does not apply to the sale or transfer of Digital Core REIT units, and brokers who effect a transfer of Digital Core REIT units are not required to withhold the Section 1446(f) withholding tax. Unitholders are not required to file a US federal income tax return or apply for a US tax identification number solely based on the Section 1446(f) withholding tax. 

Additionally, Section 1446(a) of the Code provides that a non-US partner in a partnership, including a PTP, is subject to Section 1446 withholding on amounts of income allocated from effectively connected taxable income from a US trade or business. The Section 1446 regulation stipulate that a PTP that has effectively connected income gross income, gain or loss must pay withholding tax by withholding from distributions to a non-US partner. Additionally, nominees who hold an interest in a PTP must withhold, as appropriate, on distributions paid to any non-US persons (or to the accounts of any non-US persons) of which the nominee is treated as the withholding agent. A nominee that receives a qualified notice that meets the requirements of Treas. Reg. 1.1446-4(b)(4) must withhold on the amounts specified on the qualified notice.

In this regard, Digital Core REIT has posted qualified notices providing the information necessary to appropriately withhold. As documented in these qualified notices, nominees and any other applicable parties should not be required to withhold under Section 1446(a) on distributions received from Digital Core REIT as no portion of the distribution payable is attributable to income effectively connected with a trade or business in the United States.

Digital Core REIT will provide qualified notices on its website reflecting it is not engaged in a US trade or business.

Currency Election

Distributions will be declared in US dollars. Each Unitholder will receive his distribution in Singapore dollars equivalent of the US dollar distribution declared, unless he elects to receive the relevant distribution in US dollars by submitting a Currency Election Form by the relevant cut-off date and opt out of CDP’s Currency Conversion Service at least 3 business days before the distribution payment date.

CDP launched the Currency Conversion Service on 15 June 2020. This new service will enable CDP direct account holders with Direct Crediting Service (DCS) to have their foreign currency cash distribution converted into Singapore Dollar and directly credited into their DCS bank accounts. If you are a CDP Securities Account holder with DCS, and wish to receive your distributions in USD, please be reminded to opt-out of Currency Conversion Service. For more information, please visit https://www.sgx.com/securities/retail-investor/cdp-faqs  and contact Central Depository at (65) 6535 7511 or asksgx@sgx.com.

Save for approved depository agents (acting as nominees of their customers), each Unitholder may elect to receive his entire distribution in Singapore dollars or US dollars and shall not be able to elect to receive distributions in a combination of Singapore dollars and US dollars.

Contact Information

Unitholders who have any questions or require assistance in completing the required forms can call (65) 6230 9682 during office hours from Monday to Friday, excluding public holidays. Alternatively, email your questions to digitalcorereit@boardroomlimited.com.