Hi. First time poster, long time reader. This may be better placed on the taxation forum but here goes....
Can anyone please clarify the tax situation on US shares? I am considering investing in some US blue chips and I am unsure of how the dividends are taxed here in ireland.
I looked at the double taxation agreement betwen the US and Ireland. The US has a withholding tax of 15% once a W8-BEN form is completed.
Is there a tax credit for this amount in Ireland? Or are you effectively paying 41% + 6% PRSI + 15% withholding tax = 62% on US dividend income?
You get credit for foreign tax deducted, so in effect you pay only the difference to the Revenue.
Capital gains are taxed at 20%, by the way, not 41%.
Worth it? Currency fluctuations are a big part of it, and can wipe out or alternatively enhance any gain. At the moment the dollar is cheap but that won't always be the case I assume.
Can you point me to where is says that on the revenue site?
Also I understand CGT is applied at 20% on income from the sale of shares, but surely tax on dividend income applies at your marginal rate?
From your response, there seems to be no difference from a taxation point of view on buying US or UK/Irish shares (bar the 1% stamp duty or Irish shares).