Tax on Dividends from a foreign company

NINA88

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When you receive dividends from a foreign company and you include the dividends in your tax returns can you offset the corporation tax already paid by the company and if so how is it done?
 
No, you can't offset the Corporation Tax paid.

But if the company has deducted tax on the payment of the dividend, then you may be able to claim it.

It differs from country to country.

So which country is the company in which paid the dividend?
Does the dividend certificate show tax withheld?
What company is it?

Brendan
 
Does the dividend certificate show tax withheld?
Whenever I get a dividend credited to my Davy Stockbroker account....I just get a net amount...No breakdown of tax taken.

Considering the fees I pay these people I feel that I should get a certificate within a few days telling me that I have a gross dividend of €x, a tax deduction of €x and a net credit of €x.
 
Hi Bronco

After the end of the tax-year you should get a tax pack with all the information in it.

But I agree with you. I made a claim a couple of months ago for a refund of German Withholding Tax and could not claim for a dividend I received this year, as I had not cert from Davys and they could not give one to me. They told me to wait until next year.

Brendan
 
I got in May this year for last year. This is what it looks like. I didn't request it, I was told I would get it automatically.

Brendan

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But if the company has deducted tax on the payment of the dividend, then you may be able to claim it.
I recently opened an account with Davy Stockbrokers and like the above posters I have received some dividends credited to my account.

I notice that I am getting a net dividend and that 25% tax has been deducted.

The company that I have invested in is a UK pharma company that pays a dividend 4 times a year.

Who is deducting the tax from the dividend before I get it? Is it the UK company or is it Davy Stockbrokers or is it someone in between?

I made a claim a couple of months ago for a refund of German Withholding Tax and could not claim for a dividend I received this year, as I had not cert from Davys and they could not give one to me. They told me to wait until next year.

So who has the benefit/use of this cash before you can make a claim for it to be refunded?
 
Who is deducting the tax from the dividend before I get it? Is it the UK company or is it Davy Stockbrokers or is it someone in between?

It's definitely not the UK company.

It's Davy's Irish Encashment Tax for which you get a full credit in your tax returns.

Are you sure it's not 20%?

Brendan
 
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Here is my dividend from Siemens, a German company

Gross dividend: €100
Overseas tax: €26.40 (26.4%)
Received in Ireland: €73.6
Irish Encashment Tax:€14.72 (20% of €73.60)
Dividend received: €58.88

On my Irish tax return, I claim a credit of €15 of the Overseas Tax and the €14.72 Irish Encashment Tax.

The Germans still owe me €11.40 which I have to reclaim. I get most, but not all of it and don't really understand why.

Brendan
 
Irish Encashment tax was 20% prior to 1st Jan 2021 and is now 25%

This is a different tax to Dividend Withholding Tax which only applies to Irish companies

Part of the German Tax is a an Income tax (25%) and part is a surcharge of 5.5% on the income tax
So the German tax withheld should be € 25.00 (Income tax) and € 1.38 Surcharge - maybe that was rounded up to € 26.40 :-(

They seem to be abolishing the 5.5% surcharge (which was brought in to pay for the costs of re-unification) but not for all - and presumably non-residents will still be charged
 
No, you can't offset the Corporation Tax paid.

But if the company has deducted tax on the payment of the dividend, then you may be able to claim it.

It differs from country to country.

So which country is the company in which paid the dividend?
Does the dividend certificate show tax withheld?
What company is it?

Brendan
Brendan,
Thank you. The company is US and they deduct 15% withholding. I am not an accountant or have much knowledge of tax . However , I think I can remember when corporation tax in Ireland was 50% and if you received a dividend you could offset the corporation tax against your personal tax on the dividend?. Then, I think, when they reduced corporation tax down to 12.5% they removed that faciality for Irish tax residents.

Is this correct?

.
 
Brendan,
Thank you. The company is US and they deduct 15% withholding. I am not an accountant or have much knowledge of tax . However , I think I can remember when corporation tax in Ireland was 50% and if you received a dividend you could offset the corporation tax against your personal tax on the dividend?. Then, I think, when they reduced corporation tax down to 12.5% they removed that faciality for Irish tax residents.

Is this correct?

.
Dividends is just paid into the account and 15% taken off and paid to the I assume IRS.
 

Dividends on US Shares
There is a 30% with-holding tax on US shares for non-US residents, but if you complete a W8-Ben form for your stockbroker, a lower 15% with-holding tax will apply. Your therefore receive 85% of the dividend. You are assessed on the full 100% and the 15% withheld by the US Revenue is deemed as tax already paid by you in accounting for tax due to the Irish Revenue, and for anyone on a marginal tax rate above 15%, then the balance is due to the Irish Revenue. The 15% US With-holding tax is non-refundable so pension accounts cannot reclaim it.
 
This encashment tax has me confused, reading the above its not Dividend withholding tax.
I record the income as foreign dividends, the foreign tax withheld 15% in most situations the encashment tax is Irish tax do I lump that in with the foreign tax?

This has got me a little worried now, most of dividend income is paid into a US brokerage account and its left there , it actually pays for college fees, but I pay the additional tax to Revenue when doing the Form 11, I don't deduct or pay encashment tax when we transfer the money.

Have I been doing this wrong?

The other dividend income comes from US shares that are in a Revenue approved scheme where the shares are locked in for 3 years and paid in Euro and encashment tax is deducted.
 
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Found the encashment bit , ie where to put the amount, and I think my other question is moot as I think what I'm doing is ok.

Mods delete post if ye wish.
 
....
On my Irish tax return, I claim a credit of €15 of the Overseas Tax and the €14.72 Irish Encashment Tax.
Does anyone know where to declare the DWT if filling a simple return (i.e. form 12, not sure if it's still called that when filing online these days).

A credit for "Irish Tax deducted on the encashment of foreign dividends" is there, but there's no obvious choice for entering the 15% of DWT paid. The only "Other Credits" are 1) Tax Relief Incentive Schemes (EII / SURE), 2) Professional Services Withholding Tax, 3) Other Lump Sum Payments.

None of the above look appropriate, any ideas?

EDIT/UPDATE: I think the answer is, you enter it when entering the gross amount on Foreign Dividends, there's a box for "Non refundable foreign tax deducted" which I believe is where the 15% would apply.
 
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