tax treatment of foreign dividends

[JOHN KENNEDY]

can anyone advise on a good source of information on tax treatment of foreign dividends. I own shares in telecom company KPN in Holland. I am informed that dividend witholding tax will be deducted at 15% in Holland and again at 20% in Ireland. Is this double taxation correct. If so there is no point in buying high dividend stocks for income as taxation combined with trading costs will simply swallow up all my returns. Can these taxes be avoided. Also does anyone have a good source of info/reading on this issue.

Small investor

 

[callybags]

can anyone advise on a good source of information on tax treatment of foreign dividends. I own shares in telecom company KPN in Holland. I am informed that dividend witholding tax will be deducted at 15% in Holland and again at 20% in Ireland. Is this double taxation correct. If so there is no point in buying high dividend stocks for income as taxation combined with trading costs will simply swallow up all my returns. Can these taxes be avoided. Also does anyone have a good source of info/reading on this issue.

Small investor

I'm not an expert but I cannot see how any tax could be witheld in Ireland.

We have a double taxation agreement with the Netherlands, so you should get credit for any tax witheld there.

You will be liable to Irish tax at your marginal rate on the gross dividend.

As I said, I am not an expert, so maybe others would have more accurate information.

 

[mattmacg]

I have some UK shares. Something like 20% is withheld by the UK government. The rest of the dividend that i receive is then taxed at 41% in Ireland. So essentially I lose over 50% of the dividend.
I questioned it with my accountant and he said that the 20% UK tax doesn't count for anything with the irish revenue. So it is not the most efficent investment. I bought the shares when I lived in the UK so will just wait to sell them at some stage and see if i can make any capital gain.
I'd be interested if you hear any different advice though.

 

[xertpo]

www.revenue.ie/en/tax/it/foreign-income-assets.pdf

 

[horusd]

[broken link removed]

This is a very useful Revenue guide to the tax treatment of foreign assets. Could it be included as a key post as doubtless it will be needed again? I note it's dated 2009, has it been updated since xertpo?

 

[xertpo]

I didn't come across a more recent copy, but that's not to say that there isn't one in existence. Having said that, the tax treatment of foreign assessments is unlikely to change too much over the years.

 

[mattmacg]

Q.9 The dividends I received have already been subjected to withholding tax at source. Am I entitled to a credit for the tax withheld at source?
[FONT=Verdana,Verdana][FONT=Verdana,Verdana]A. [/FONT][/FONT][FONT=Verdana,Verdana][FONT=Verdana,Verdana]This depends on whether Ireland has a Double Taxation Agreement (DTA) with the country from which the dividend was paid.
Ireland currently has DTAs with 45 countries. Generally, it is Article 10 of these Agreements that deals with the taxation of dividends. For a list of Ireland’s double taxation agreements, please click here.
In most cases, the dividend is taxed in the country of which the company paying the dividend is resident. The dividend is also taxable here and, in most cases, it is the net dividend that is taxed with no credit for any withholding tax suffered.
In relation to UK dividends, you are assessable here on the net amount of the dividend received and you are not entitled to any credit for the UK tax (currently 1/9[/FONT][/FONT][FONT=Verdana,Verdana][FONT=Verdana,Verdana]th [/FONT][/FONT][FONT=Verdana,Verdana][FONT=Verdana,Verdana]of the net dividend) deducted at source.
Example:
Net Dividend: €450
UK Tax Credit: € 50
Gross Dividend: €500
You are assessable here on €450 and there will be no credit given for the €50 tax deducted.
[/FONT][/FONT]

 

[Shaz]

This is a very useful Revenue guide to the tax treatment of foreign assets. Could it be included as a key post as doubtless it will be needed again? I note it's dated 2009, has it been updated since xertpo?

Hi,
I find Q9 and Q10 contradicting each other. I intend to purchase uk and us shares for dividends. My question is: Can I claim tax credit for withholding tax already deducted by the f companies?

Thanks.