8-KOther Events

DIGITAL REALTY TRUST, INC. 8-K Report, Corporate Update (Mar 24, 2010)

Filed March 24, 2010For Securities:DLRDLR-PJDLR-PKDLR-PL

Summary

Digital Realty Trust, Inc. (DLR) filed a Form 8-K on March 24, 2010, to supplement the U.S. federal income tax considerations section of its existing Registration Statement on Form S-3. The primary purpose of this filing is to inform investors about two significant pieces of potential tax legislation that could impact their holdings. The first piece of legislation concerns new rules for foreign accounts, which may impose withholding taxes on certain payments made to foreign financial institutions and other non-U.S. entities. This could result in a 30% withholding tax on dividends and sales proceeds related to DLR's common stock if compliance requirements are not met, potentially affecting U.S. stockholders holding shares through foreign intermediaries and certain non-U.S. stockholders. The second piece of legislation, passed by the House of Representatives, proposes a 3.8% surtax on dividends and capital gains for individual U.S. stockholders, estates, and trusts, which would apply to taxable years beginning after December 31, 2012, if enacted.

Key Highlights

  • 1DLR is providing supplemental information regarding U.S. federal income tax considerations for its stockholders.
  • 2New legislation related to foreign accounts may introduce withholding taxes on payments to foreign financial institutions and other non-U.S. entities.
  • 3A potential 30% withholding tax could apply to dividends and gross proceeds from DLR common stock for non-compliant foreign entities.
  • 4This foreign account legislation is slated to become effective for payments made after December 31, 2012.
  • 5Proposed legislation, passed by the House, could impose a 3.8% surtax on dividends and capital gains for individual U.S. stockholders, estates, and trusts.
  • 6The proposed surtax legislation, if enacted, would apply to taxable years beginning after December 31, 2012.
  • 7Investors are strongly advised to consult their own tax advisors for personalized guidance on these legislative developments.

Frequently Asked Questions

The main reason for this 8-K filing is to supplement the U.S. federal income tax considerations section of Digital Realty Trust's existing Registration Statement on Form S-3, informing investors about new and proposed tax legislation that could affect their investments.

If you hold DLR shares through a foreign financial institution or other non-U.S. entity, and that entity does not comply with new reporting and diligence requirements, you could be subject to a 30% withholding tax on dividends and gross proceeds from the sale of your DLR shares. This legislation is set to take effect for payments made after December 31, 2012.

The proposed legislation, passed by the House of Representatives, would impose an additional 3.8% surtax on certain U.S. individuals, estates, and trusts on their net investment income, which includes dividends and capital gains from the sale of stock like DLR's. This would apply to taxable years beginning after December 31, 2012, if enacted.

The filing advises prospective investors and current stockholders to consult their tax advisors. While no immediate action is mandated by the filing itself, understanding these potential tax implications is crucial for future financial planning. The applicability and final form of this legislation are not yet certain.