Key Post The taxation of UK dividends

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Domo

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Irish residents are taxable on the NET UK dividend received.

There is no credit available for any UK withholding tax under the trems of the Double Tax Treaty with effect from 6 April 1999.

With regard to the UK withholding, a non-UK resident individual can in theory make a claim for a refund of this, but non-resident's refunds are limited to the excess of credit over 15% of the gross, and as dividend withholding tax is only at 10%, generally no refund will be due.

Therefore:

In the UK you pay the 10% withholding tax, and no refund due.
In Ireland you pay your marginal rate of tax and levies on the NET amount, with no credit for UK Tax.

This may not appear to be fair - but it is the way it is I'm afraid.
 
I have had some UK shares for 10 years. Each year the dividend was reinvested in a few new shares. I got a slip saying x amount of UK tax withheld.
I assumed that I was not liable for any further Irish tax. Is this correct?
 
No, it's not correct.

You received a dividend of £100 gross
UK withholding tax of £10
Net dividend: £90

You are taxed on the £90 -it does not matter if you reinvested it in shares or took it in cash.

Brendan
 
Hey Guys,
I would like to update my table ......."Summary of stock market investment costs" with information from here on DWT.
So just to confirm in summary...

Irish Dividend- Is subject to dividend with holding tax at 20% (taken off immediately and automatically). Then on top of this one must pay in income tax returns PRSI, USC and (income tax at 40% marginal rate if applicable).

UK Dividend- Is subject to dividend with holding tax at 10% (taken off immediately and automatically). After DWT, on the balance one must pay in income tax returns PRSI, USC and (income tax at 40% marginal rate if applicable).

For US and other countries dividends ?...
 
landlord said:
Irish Dividend- Is subject to dividend with holding tax at 20% (taken off immediately and automatically). Then on top of this one must pay for income tax returns PRSI, USC and (income tax at 40% marginal rate if applicable).
Click to expand...

It's not quiet right to say on top of. Irish residents are taxed on the total dividend and claim a credit for the DWT.

Eg dividend of €100 is subject to 40% Income Tax, 4% PRSI and 7% USC ie €51 with a credit for €20 already paid. So the effective rate is 51%.
 
No tax is deducted from UK dividends before they are paid to investors. If a UK company declares a dividend of £10 per share, then a shareholder will receive £10 in cash for each share held. People sometimes refer to this as a ‘net’ dividend (because of the (soon to be abolished) notional tax credit for UK taxpayers) but this can be misleading as no tax has been deducted.

The bottom line is that there is no withholding tax on UK dividend payments.
 
Hi guys I have started to receive dividend payments from UK investment trusts , I wanted to make sure my tax affairs are in order so I looked at revenue website which I found confusing , I registered for PAYE anytime , I had a look at eform12 I found the dividend section but that form is for 2015. I read on revenue you need to pay your dividend tax before the end of the month you receive it in .

So I rang revenue , I asked " How can I pay dividend income on UK shares"?
The girl had me on hold for a while and finally said easiest thing to do is just pay in 2017 when the eform12 is updated , you add up all your dividend income and declare it on eform12, the revenue then send you a balancing statement of what you owe and you pay it.
I asked about paying it as you receive it and she said if you want to do that you need to send in the correspondence from your broker showing the dividend and we can manually add it each month - I rang saxobank they said they never send correspondence and everything is view-able online only.

Just checking if this is correct information , I am going to go with the option of filling in an eform12 in 2017 with all dividend info for the whole of 2016 and hopefully that works out, can anyone confirm this is correct? I only ask here as the lady in revenue didn't fill me with confidence in her response , I would of imagined this as a fairly common occurance and not something I would have to be on hold on phone for 10mins while checking with other staff members.

Thanks
 

Yes, you declare your 2016 dividend income with your 2016 tax return, nothing abnormal about that. If you are a PAYE worker you'll get a balancing statement showing net liability from all your incomes less taxes paid already. Capital gains are a little different, you'll settle those before year end in most cases.
 
Dividend Withholding Tax ("DWT") is something different in the context of what you read on Revenue's website. That's from a dividend paying company's perspective (e.g. Gekko Limited must withhold 20% of a €100 dividend paid to me and pay it over to Revenue the following month).

I then include the €100 dividend in my 2016 Form 12 or Form 11 (i.e. tax return) which is due in October/November 2017. The income tax is €40, but I've already suffered DWT of €20, so I'm on the hook for another €20. USC and PRSI also arise obviously.

The "10% UK tax credit" should be ignored. You pay tax etc on the UK dividend that you receive. A £100 dividend results in you being paid £100. The 10% notional credit is a legacy of how UK corporates were taxed previously and is a quasi-tax credit against UK corporation tax. In any event, you ignore it and do not lose out by doing so. The system is due to change to a more conventional one.
 
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