Broker for CY / Dubai residents

[JustAnotherNomad]

If you have your personal tax residency in UAE, it might be worth setting up a holding company for your US dividend stocks in another jurisdiction (Estonia, Cyprus, etc.).

You can't lower the withholding tax rate that way, that would be illegal due to LoB clauses in the tax treaties. The US government isn't that stupid.
Sure you can do it and lie to them, then you've committed tax fraud in the US. Your call if you want to mess with the IRS.

 

[Onassis]

You can't lower the withholding tax rate that way, that would be illegal due to LoB clauses in the tax treaties. The US government isn't that stupid.
Sure you can do it and lie to them, then you've committed tax fraud in the US. Your call if you want to mess with the IRS.

He could set up a company in Romania for the sole purpose of holding US equities. See my post here: Romania micro company not worth it anymore?

The DTAA does not contain a LOB clause and the WHT on dividends paid out to Romanian tax residents is only 10%. It might also be possible to credit the WHT paid in the US against Romanian corporate tax.

However in this case I would suggest using some kind of an IBC combined with Romanian corporate tax residency. Not sure if I would want to trust the Romanian legal system

 

[JustAnotherNomad]

But then you'd have Romanian withholding tax on top of that.
Though it seems like you could reduce it to 0 with a UAE holding company:

Romania - Corporate - Withholding taxes

Detailed description of corporate withholding taxes in Romania

taxsummaries.pwc.com

But by then you'd have such a complicated setup that you'll probably pay a ton for accounting and compliance, on top of Romanian corporate income tax...
If you get a lot of dividends from the US, you'd probably be better off with some US-centric setup like a trust.

 

[Onassis]

But then you'd have Romanian withholding tax on top of that.

Correct. However, that could could be avoided thanks to the EU parent-subsidiary directive - the Romanian company could be owned by a Cyprus tax resident HoldCo.

But by then you'd have such a complicated setup that you'll probably pay a ton for accounting and compliance, on top of Romanian corporate income tax...

Right, it would only make sense if the US equities are part of a much larger portfolio and if the revenues fit into the Romanian micro-company regime requirements.

If you get a lot of dividends from the US, you'd probably be better off with some US-centric setup like a trust.

Not sure how that would help. Perhaps a 501c3 could be used in combination with personal tax residence in a tax free country. The IRS allows 501c3s to pay reasonable salaries to its employees.

 

[Radko]

Correct. However, that could could be avoided thanks to the EU parent-subsidiary directive - the Romanian company could be owned by a Cyprus tax resident HoldCo.


Right, it would only make sense if the US equities are part of a much larger portfolio and if the revenues fit into the Romanian micro-company regime requirements.


Not sure how that would help. Perhaps a 501c3 could be used in combination with personal tax residence in a tax free country. The IRS allows 501c3s to pay reasonable salaries to its employees.

Anyone knows if there's a way of getting a lower withholding rate than 10% directly from the U.S.? I know the countries that thanks to a special double tax treaty can get a 10% withholding rate, but is it possible to get 5% or even 0%?

 

[JustAnotherNomad]

Correct. However, that could could be avoided thanks to the EU parent-subsidiary directive - the Romanian company could be owned by a Cyprus tax resident HoldCo.

Yeah, and then you run into issues with this new anti-shell thing. Also the setup just gets ridiculously complex.

Not sure how that would help. Perhaps a 501c3 could be used in combination with personal tax residence in a tax free country. The IRS allows 501c3s to pay reasonable salaries to its employees.

I know a UHNWI from the US who lives in Thailand tax free. He manages his own family office as a trust. I think it was a combination of two trusts, one of them in... Nevis? Quite complex. But he lives a tax free life as a US citizen in Thailand, as far as I know.

is it possible to get 5% or even 0%?

The IRS has published tables with all WHT rates, just google them.

 

[Radko]

Yeah, and then you run into issues with this new anti-shell thing. Also the setup just gets ridiculously complex.



I know a UHNWI from the US who lives in Thailand tax free. He manages his own family office as a trust. I think it was a combination of two trusts, one of them in... Nevis? Quite complex. But he lives a tax free life as a US citizen in Thailand, as far as I know.



The IRS has published tables with all WHT rates, just google them.

I can't find a country with less than 10% withholding rate on that list, but I've read that you can go down to 5% with different structures, which would cost money.

Regarding Thailand as we all know they have 0% capital gains tax on foreign earned income, but the withholding rate is 15% from the U.S., again, maybe with an expensive trust you can get 0%, maybe...

 

[JustAnotherNomad]

maybe with an expensive trust you can get 0%, maybe...

I don't know the details of his setup, but I know it involves two trusts and I'm sure he doesn't just pay out money to Thailand from the US. It's a lot of money from what I understood, so you can bet it's not a DIY setup, but all done set up by lawyers that don't come cheap, both in the US and Thailand.
Anyway, anything he pays out would only cover his living expenses, which I think are quite moderate in comparison to his wealth... And he probably makes sure to wait 1 year+ before remitting anything to Thailand.

 

[Paul Tudor Jones]

I'm 100% sure about the UAE as I these get deducted from my dividends.
So 30% WHT for dividends from US stocks and 15% for most other countries (Canada, Netherlands)

Not sure about the situation with Cyprus.

You can also buy accumulating instead of distributing ETFs so the dividends automatically get reinvested and you avoid the tax altogether. For example: "Vanguard FTSE All-World UCITS ETF (USD) Accumulating".

 

[AndyAresa]

You can also buy accumulating instead of distributing ETFs so the dividends automatically get reinvested and you avoid the tax altogether.

when you liquidate the position and make gains, does the broker withhold tax on the gains?

 

[JimBeam]

when you liquidate the position and make gains, does the broker withhold tax on the gains?

No, as that's capital gains tax (not withholding tax).
If you're based in UAE there's no capital gains tax so you won't pay that.

 

[JustAnotherNomad]

Strictly speaking, the withholding tax is capital gains tax as well, just in the other country