Foreign stock portfolio

[EuroSean76]

I have a stock portfolio in Canada and I would like to know if the income received from those holdings is subject to tax here in Ireland. Ireland and Canada have a dual tax agreement in place, but I'm not sure if dividends etc are included.

 

[max]

You pay tax on the income in canada, at local rates. In your Irish return, you declare this income, and you also declare that it has been taxed in Canada, which exempts you from Irish tax.

 

[EuroSean76]

That seems to make sense to me. Thanks so much for your help.

 

[dam099]

You pay tax on the income in canada, at local rates. In your Irish return, you declare this income, and you also declare that it has been taxed in Canada, which exempts you from Irish tax.

Are you Irish resident, if so that does not sound right, I'd double check with the [broken link removed] and [broken link removed] double tax agreements.

Reading the new agreement it says the following on dividends:

1. Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other Contracting State.

2. However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State, but if the beneficial owner of the dividends is a resident of the other Contracting State, the tax so charged shall not exceed:
(a) except in the case of dividends paid by a non-resident-owned investment corporation that is a resident of Canada, 5 per cent of the gross amount of the dividends if the beneficial owner is a company which controls directly or indirectly 10 per cent or more of the voting power in the company paying the dividends;
(b) 15 per cent of the gross amount of the dividends in all other cases.
This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are paid.

My interpretation of this is that you would in most circumstances pay a maximum of 15% on the dividends in Canada and the dividends would also be taxable in Ireland.

The general principle on elimination of double taxation is set out later and states:

2. Subject to the provisions of the laws of Ireland regarding the allowance as a credit against Irish tax of tax payable in a territory outside Ireland (which shall not affect the general principle hereof):
(a) Canadian tax payable under the laws of Canada and in accordance with this Convention, whether directly or by deduction, on profits, income or gains from sources within Canada (excluding in the case of a dividend tax payable in respect of the profits out of which the dividend is paid) shall be allowed as a credit against any Irish tax computed by reference to the same profits, income or gains by reference to which Canadian tax is computed;

So the 15% you paid in Canada could then be deducted from your Irish tax liability on the dividends.

I am not an expert on the double tax agreement so you should seek independent professional advice (or maybe if the amount is low clarify with the revenue but remember individuals there can be wrong sometimes too and they are not going to advise you on the best ways to even legally minimise your taxes)

 

[keybored]

What exchange rate do you use when calculating the Irish tax?