Tax on US Company Dividends / Shares

[Daft Dave]

If the dividends that are paid quarterly from a US Company, are not brought back into Ireland but instead reinvested in more shares in the same US company, should tax be paid on the dividend? 30% tax is already deducted from the gross amount in the US.

If tax has to be paid on the dividend and the overall value of the share fund has reduced by more than the amount of the dividend paid out in the year, it does not seem right to have to pay any tax as overall there has been a loss.

Thanks,

Dave

 

[Chris]

You are liable to income tax on the full value of any dividend, whether paid in cash or shares. As there is a double taxation agreement with the US you only have to pay the difference between what you are liable for and what has been deducted.

Your investment losss is only a paper loss. This loss can only be offset if it is materialised, and as far as I'm aware a materialised capital loss can only be offset against a materialised capital gain, and not dividend income.