How to avoid dividend tax for non resident investor?

[MoralCapitalist]

Hello,
I am a Panamenian resident investing in ETFs and other securities. How can I invest without having to pay dividend witholding tax at source?

 

[CyprusLawyer101]

Hello,
I am a Panamenian resident investing in ETFs and other securities. How can I invest without having to pay dividend witholding tax at source?

Where are the companies you are investing in?

 

[fshore]

Hello,
I am a Panamenian resident investing in ETFs and other securities. How can I invest without having to pay dividend witholding tax at source?

You can form a holding company in a country with a tax treaty to the country that withholds the tax. For example the UK.

 

[MoralCapitalist]

Where are the companies you are investing in?

In 2021 I owed mostly commodeties ETFs domiciled in the US two of them ditributed something like 35% Dividend which I had to pay on it 30% wiitholding tax, which put me in painfull minus.

You can form a holding company in a country with a tax treaty to the country that withholds the tax. For example the UK.

Thats a good idea, but a bit pricey and still will probably only reduce the tax to 15%. I read about alternative ETFs in Irland or luxembourg but it look quite complicated to get from each ETF an examption. Any other idea?

 

[JackAlabama]

Hello,
I am a Panamenian resident investing in ETFs and other securities. How can I invest without having to pay dividend witholding tax at source?

You could try to replicate your dividend investing strategy by selecting companies which do not pay out divs but rather reinvest divs within their own business thus resulting in increased stock price.

You get your dividend by just selling that small part and capital gains would not be taxed by doing so.

 

[MoralCapitalist]

You could try to replicate your dividend investing strategy by selecting companies which do not pay out divs but rather reinvest divs within their own business thus resulting in increased stock price.

You get your dividend by just selling that small part and capital gains would not be taxed by doing so.

this solution would be the best but in some sectors, which i want to invest all ETFs are Dividend distributors.

 

[Larin]

You can invest in an Irish-Domiciled ETF which would result in 15% withholding instead.

 

[Marzio]

How can I invest without having to pay dividend witholding tax at source?

Are those dividends paid by a regulated investment company (RIC)?

 

[MoralCapitalist]

Are those dividends paid by a regulated investment company (RIC)?

Yes, the account is in well known broker and ETF from the big investment firms

You can invest in an Irish-Domiciled ETF which would result in 15% withholding instead.

It looks to me like the dividend tax in Irland is 25%

https://www.revenue.ie/en/companies...d Withholding,which the distribution is made.

 

[Larin]

Yes, the account is in well known broker and ETF from the big investment firms


It looks to me like the dividend tax in Irland is 25%

https://www.revenue.ie/en/companies...d Withholding,which the distribution is made.

Here is a page that explains taxation of Irish ETFs: Nonresident alien investors and Ireland domiciled ETFs - Bogleheads

It also contains a link to a description of withholding taxation for non-residents.

 

[ecool]

Here is a page that explains taxation of Irish ETFs: Nonresident alien investors and Ireland domiciled ETFs - Bogleheads

It also contains a link to a description of withholding taxation for non-residents.

yes, this is a good idea if you are living in a country without a tax treaty with the US. Currently doing exactly this, ETF investment with dividends in Ireland domiciled ETF and you get 0% withholding tax (not sure if all cases, but at least in my case). Just be careful as some ETF have very low trade volume so you have to do more research before buying

 

[MoralCapitalist]

Here is a page that explains taxation of Irish ETFs: Nonresident alien investors and Ireland domiciled ETFs - Bogleheads

It also contains a link to a description of withholding taxation for non-residents.

Thank you very much for this information. I read it before too but saw on the Irish tax authorities website that an Irish non resident has to apply for the exemption, which is valid only for 5 years and it seemed to be hard to prove your tax residency to them (the require some documents from the tax authorities in the persons domicile). Do you know if it is enogh just to be registered in the brokerage account as "Panamanien resident"?

yes, this is a good idea if you are living in a country without a tax treaty with the US. Currently doing exactly this, ETF investment with dividends in Ireland domiciled ETF and you get 0% withholding tax (not sure if all cases, but at least in my case). Just be careful as some ETF have very low trade volume so you have to do more research before buying

Thats good news. Thank you.
Did you have to file some examption fillings with the Irish tax authorities? Or was it automatically? May ask which broker do you use for trading?

 

[Larin]

Thank you very much for this information. I read it before too but saw on the Irish tax authorities website that an Irish non resident has to apply for the exemption, which is valid only for 5 years and it seemed to be hard to prove your tax residency to them (the require some documents from the tax authorities in the persons domicile). Do you know if it is enogh just to be registered in the brokerage account as "Panamanien resident"?


Thats good news. Thank you.
Did you have to file some examption fillings with the Irish tax authorities? Or was it automatically? May ask which broker do you use for trading?

I’ve been using interactive broker and my account is with their UK entity. I haven’t had to submit anything special to the Irish tax authorities. I suspect the process is somewhat automatic based on the stated country of residence when you open the account.

 

[ecool]

Did you have to file some examption fillings with the Irish tax authorities? Or was it automatically? May ask which broker do you use for trading?

Same as Larin said, I'm using Interactive Broker (via the reseller "Tradestation International" as IB is not directly supported in my country without a reseller).
Had nothing to submit, just make sure to check that the ETF is indeed domiciled in Ireland and you are good to go. This is nothing shady or illegal, it's simply how it is. You can contact IB support if you have more questions and they should inform you without problems.

 

[MoralCapitalist]

Same as Larin said, I'm using Interactive Broker (via the reseller "Tradestation International" as IB is not directly supported in my country without a reseller).
Had nothing to submit, just make sure to check that the ETF is indeed domiciled in Ireland and you are good to go. This is nothing shady or illegal, it's simply how it is. You can contact IB support if you have more questions and they should inform you without problems.

thanks a lot, I will do it.

I’ve been using interactive broker and my account is with their UK entity. I haven’t had to submit anything special to the Irish tax authorities. I suspect the process is somewhat automatic based on the stated country of residence when you open the account.

thanks a lot, I will do it.