Dividend processing fees – do they reduce my tax liability?

Discussion in 'Investments' started by Paul F, 9 Oct 2018.

  1. Paul F

    Paul F Registered User

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    I use an online broker (DeGiro) and they take a "dividend processing fee" every time I receive a dividend.

    When calculating my tax liability for dividends, am I allowed to first subtract this processing fee? I.e., is it OK to calculate the tax on the amount I receive after fees?
     
  2. Susie2017

    Susie2017 Frequent Poster

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    Hi. I would be interested in the answer to this question. Also do degiro withholding tax on dividends ? How does this work for UK and German stocks.
     
  3. Zebedee

    Zebedee Frequent Poster

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    It’s an interesting question and one that I had not thought of but would be interested to know the answer.

    I think there is no longer withholding tax on uk dividends. I’m not sure of the German position but usually with EEA and main OECD countries the Revenue has a tax treaty with the country under which you can offset the withholding tax against the relevant Irish income tax. You’d need to check the revenue website on this one to be sure.
     
  4. dublin67

    dublin67 Frequent Poster

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    No, you can't subtract any items from foreign dividends. All costs etc of the portfolio aren't an allowable tax deduction.
    You can claim a credit for withholding tax on dividends at the treaty rate on foreign dividends - this is usually 15%. While some countries may deduct an amount higher than this (e.g. Switzerland was/is 35%) you should, in theory, be able to reclaim the amount over 15% from the foreign Revenue authority. I had seen some stock portfolios with very significant percentages on German and Swiss dividends withheld. Some countries will limit the amount withheld to the treaty rate while others will deduct the domestic rate.
     
  5. jpd

    jpd Frequent Poster

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    I collected the dividend withholding tax from the French tax authority for years as they were withholding above the 15% allowed - a bit of form filling once a year to recover a few hundred euro but I never recover from the Germans as it's only a few euro and not worth the bother. But the maximum they are supposed to withhold is 15% so anything above that is recoverable
     
  6. Susie2017

    Susie2017 Frequent Poster

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    Anyone have a list of countries that stick to the 15 % withholding rate. I don't fancy the hassle of filling in tax forms if it can be avoided. Also what happens with US based share dividends. I have filled out a W8 BEN form with Degiro but I can't recall what the withholding tax rate is on US stock dividends.
     
  7. EmmDee

    EmmDee Registered User

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    I'm sure everyone realises, but to be clear, countries which Ireland has a tax treaty with will generally apply 15% WHT at source (i.e. when and where the dividend is paid) if you provide a tax form or declaration to your broker / custodian. Trying to reclaim tax after the event is probably not worth it. But you still pay the exact same total income tax on the dividend - you will owe the difference between 15% and your marginal Irish rate to the Irish revenue.

    With US based shares, if you have provided a W8BEN to your broker, you should receive the total dividend less 15% WHT (assuming you claimed tax treaty rate in the box on the W8BEN and you are Irish resident).

    List of countries with which Ireland has double taxation treaties here - https://www.revenue.ie/en/tax-professionals/tax-agreements/double-taxation-treaties/index.aspx
     
  8. Gordon Gekko

    Gordon Gekko Frequent Poster

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    That’s not generally the case.

    Countries withhold at many different rates of tax. For example, BMW dividends suffer 26% tax; you claim a credit for 15% and chase Angel Merkel for a refund of the other 11%.
     
  9. EmmDee

    EmmDee Registered User

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    Check your custodian - withholding tax relief at source is available in Germany.
     
  10. rob oyle

    rob oyle Frequent Poster

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    Back to the original question asked, I have always used the dividend net of processing fee (not withholding taxes) as the basis for income in my tax returns.