Withholding Tax to be Paid in Ireland for Dividends Earned from International Companies

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Ironman 70.3

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Trying to get my head around tax obligations in relation to earnings from Dividends abroad by an Irish Resident.

I have shares in a number of companies in the USA, Germany, Netherlands, Spain, Finland and at home. Mostly small positions in Dividend paying companies approx €20,000.

I receive my dividends through my broker (IG or DeGiro) less the Withholding Tax from the respective country.

My question is what are my tax obligations in Ireland now that i have received the dividend. I understand that the earnings are treated as income and are subject to tax, prsi and usc. I am on the marginal tax rate of 41%.

I will use this example:

Unilever(Netherlands)

50 Shares X Dividend of 1.28 = €64
less 15% Dutch Withholding Tax (9.60)
Amount Received €54.40.

My question is do I pay 41%(+USC and PRSI) on the €54.40 or do i pay 41% (less 15% Dutch already paid) amounting to 26% on the €54.40.

There appears to be differing opinions.

Finally can I claim anything back from the Dutch authorities. I know the amounts are small but it all adds up.

Thanks.
 
Ireland has double tax agreements with all those countries. Therefore tax paid to them should not need to be paid again to Ireland. However I have not seen a clear indication from Revenue on how to do this.

I would suggest to calculate your tax due on Irish rules and then deduct the amount paid to the foreign country from this.

Hopefully somebody more knowledgeable can add to this.
 
Not at the moment. Just the tax deduction. My online Broker IG don't give a breakdown, just the amount per share after tax.
 
Ireland has a Double Taxation Treaty with the Netherlands which covers this. The Dutch are only allowed to charge 15% Dividend Withholding Tax on any dividends paid to Irish resident's which is in line with other EU countries by and large.

As it happens, that is the amount deducted by your broker. Some countries deduct more, eg France deducts 21%, but you can claim the amount over-charged back from the foreign tax authority albeit with a lot of paperwork which probably puts a lot of people off especially if it's only a few hunderd euro or so.

In your Irish Tax return you must declare the gross amount ie the € 64 under the foreign earnings section of Form 11 and the tax withheld ie € 9.60.

With a complicated calculation, the Revenue calculate an effective irish Tax rate based on irish and foreign income, take the net amount, gross it up and then allow a credit for the foreign tax withheld.

The rules about investment income changed so that I think you now liable to pay PRSI but not USC on the gross amount. The Form 11 calculates it all if you use ROS.

To answer your final question - you can not claim anything back from the Dutch - they are entitled to their 15%
 
Great answer JPD - that clears it for me. I now know where to stand relative to future tax bill. Thank You.
 
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