DWT on income received in an ARF account

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MTB_FS

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Hi All,

My father has an ARF account with one of the main stockbrokers and it looks like he was charged Dividends Withholding Tax on a number of his investments within his ARF. These include US dom ETF's, US stocks and some EU stocks. Any Irish stocks or Irish don ETF's are not charged DWT.

Is this correct, as I always thought gains/income in pension funds/assets were not taxed.

Thanks - MTB
 
DWT is deducted by the source of the payment not the ARF manager

In the case of US ETF's for example, the tax is deducted before the dividend is sent to your father's broker.

In most cases, the tax can be reclaimed from the foreign tax authority but this will involve a bit of paperwork and longish delays
 
Non US citizens can avoid or reduce US witholding taxes by filing a W-8 BEN.

About Form W-8 BEN, Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting (Individuals) | Internal Revenue Service

Information about Form W-8 BEN, Certificate of Status of Beneficial Owner for United States Tax Withholding and Reporting (Entities), including recent updates, related forms and instructions on how to file. Submit Form W-8 BEN when requested by the withholding agent or payer.
www.irs.gov www.irs.gov
E.g. if you're investing via a US broker such as E*Trade.
But I have no idea if/how this works in the context of an ARF.
And I don't know how things work for EU stocks.
 
Hi All,

Thank you for your help. The investment firm outlined that certain dividends may be liable to overseas withholding tax.

Interesting as I never thought of this when considering investments in a pension fund.

Thanks.
 
MTB_FS said:
Hi All,

Thank you for your help. The investment firm outlined that certain dividends may be liable to overseas withholding tax.

Interesting as I never thought of this when considering investments in a pension fund.

Thanks.
Click to expand...
Pensions are marketed as accumulating tax free. But as AAA mentioned, it is from Irish tax. Foreign jurisdictions still deduct their taxes. As most people invest in funds, you don't see any of the taxes or even the number of shares held in any policy.

I'm not sure if you can reclaim the tax from the IRS. Someone I knew tried to do this a number of years ago and had so many roadblocks put in his way, he eventually gave up. It was an extremely difficult process as he wasn't the owner of the policy, his ARF was and the IRS wouldn't deal with him directly. The broker he used wasn't overly interested in a prolonged process with the IRS, especially as they never engaged in this with their other clients, they just paid the tax.
 
Steven Barrett said:
I'm not sure if you can reclaim the tax from the IRS. Someone I knew tried to do this a number of years ago and had so many roadblocks put in his way, he eventually gave up.
Click to expand...
I wonder if there's a W-8 BEN or equivalent for a pension fund as opposed to an individual in order to reduce or eliminate US withholding taxes? But I guess that the AFR managers should know that and would have dealt with that if it was possible.

For what it's worth this (Conexim Advisors) ARF application form has several mentions of the W-8 BEN. I can't find a link on their site to this form and can only find it using Google.
 

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ClubMan said:
I wonder if there's a W-8 BEN or equivalent for a pension fund as opposed to an individual in order to reduce or eliminate US withholding taxes? But I guess that the AFR managers should know that and would have dealt with that if it was possible.

For what it's worth this (Conexim Advisors) ARF application form has several mentions of the W-8 BEN. I can't find a link on their site to this form and can only find it using Google.
Click to expand...
That is because it is self directed and people can buy US shares directly. It is not for funds.
 
I had the same challenge with a self directed pension when I expected to be exempt from DWT.
The W-8 BEN exempted me from DWT on dividends for US stocks but not for distributions from US REITS as the exemption rules are different to equities.
DWT on dividends for European stocks is applied and must be reclaimed from the tax authority in each jurisdiction by submitting either a paper application or online form.
In Germany these is also an option to request a four year exemption from DWT.
I'm afraid it is not a trivial process - requires the Consolidated Tax Voucher for each year being reclaimed and proof of tax residency from Irish Revenue.
Not to mention language challenges navigating the tax authority websites and with the forms themselves.
Personally I've started avoiding European stocks to avoid the hassle involved to claim back the DWT.
 
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