Seeking Advice on Lowering Withholding Tax on U.S. Investments through Relocation

[Jbb1]

Currently, I am exploring the possibility of establishing a new entity or transferring my residence to a country that might entail less withholding tax on my US-based investments.

At the moment, I reside in the UAE where a 30% withholding tax is charged on each dividend payout. I've been considering a move to Thailand for personal residency, which would potentially cut taxes to 15%, but is there anywhere else offering more beneficial terms?

I appreciate any insights or suggestions you may have.

Thanks!

 

[CyprusLawyer101]

If Cyprus could be an option for relocating, tgen there is structuring available that can reduce wht on dividends to 0%. Would be happy to discuss in pm if there is interest.

 

[Jbb1]

If Cyprus could be an option for relocating, tgen there is structuring available that can reduce wht on dividends to 0%. Would be happy to discuss in pm if there is interest.

Hello,

Please DM me.

 

[Marzio]

there is structuring available that can reduce wht on dividends to 0%

It's not possible to reduce WHT on US dividends to 0%, the lowest for Cyprus is 15%

I've been considering a move to Thailand for personal residency, which would potentially cut taxes to 15%

You have to double check double tax treaty between US and Thailand because according to the article 4 of the treaty you will not be considered a Thailand resident and allowed for a lower WHT rate if you are only taxed on local sourced income.

 

[CyprusLawyer101]

It's not possible to reduce WHT on US dividends to 0%, the lowest for Cyprus is 15%

Yes not 0%. You could reduce to 5% though subject to conditions.

Thank you for keeping me in check

 

[Jbb1]

You have to double check double tax treaty between US and Thailand because according to the article 4 of the treaty you will not be considered a Thailand resident and allowed for a lower WHT rate if you are only taxed on local sourced income.

I understand what you are saying but my broker just told me that after updating my residence they will only withhold 15% of dividends.

Can I get in trouble? I’m using Schwab.

 

[Martin Everson]

Can I get in trouble?

Why would you get in trouble for updating your address if you relocate? They probably choose 15% as an in house rule and leave you to claim back the rest manually if the DTA between US and other country is lower. i.e countries like Romania and China etc have 10% WHT on US dividends.

 

[Mercury]

You have to double check double tax treaty between US and Thailand because according to the article 4 of the treaty you will not be considered a Thailand resident and allowed for a lower WHT rate if you are only taxed on local sourced income.

OP receives US dividends, so non-local sourced income if he is Thai tax resident.

US-TH DTA Article 4 quote:
"A person will not be a resident of a Contracting State for the purposes of the Double Tax Agreement, if they are liable to tax in that State only on income from sources in that State."

 

[Marzio]

OP receives US dividends, so non-local sourced income if he is Thai tax resident.

I don't get your point.

If his US income will not be taxed in Thai, US will not consider him Thai tax resident because he is liable to tax Thai only on income from sources in Thai (if US income is not remitted).

To be considered Thai tax resident and benefit from the lower WHT his income should be taxed in Thailand. That's what article 4 is saying.

 

[TheCryptoAnt]

Georgia has no WTH tax with the US, and relocation is very easy there.

 

[Mercury]

To be considered Thai tax resident and benefit from the lower WHT his income should be taxed in Thailand. That's what article 4 is saying.

Let's say OP has only US dividends income. He will be liable to pay tax on these dividends if he is Thai tax resident (the only condition to be considered resident for tax purposes is to stay more than 179 days per calendar year in Thailand).

My understanding and I may be wrong is whether he remits it (and declares and pays tax) or not into Thailand is not relevant as long as US does not ask any Thai tax certificate (and they don't).

US could have asked tax residence certificates (easily) since decades from non resident aliens with US dividend income, there must be a reason why they are not enforcing it.

 

[Marzio]

Georgia has no WTH tax with the US, and relocation is very easy there.

The treaty does not provide for a withholding tax rate on dividends, so the domestic rate applies (30%)

My understanding and I may be wrong is whether he remits it (and declares and pays tax) or not into Thailand is not relevant as long as US does not ask any Thai tax certificate (and they don't).

US could have asked tax residence certificates (easily) since decades from non resident aliens with US dividend income, there must be a reason why they are not enforcing it.

US doesn't care about tax residence certificate because it's not about spending >180 days in Thailand since article 4 states that to be considered "resident" in the context of the treaty you should not be taxed only on local source income.

The fact that they are not enforcing it or the perception that they are not enforcing is to be seen now that Thailand switched to worldwide taxation you will be taxed on any cent remitted in Thailand (that's what US wanted).

Rest assured that if US sees that a treaty is abused or they feel they are getting the worst end of the deal they will terminate it without hesitation (see what happened to HU-US treaty).

 

[Mercury]

US doesn't care about tax residence certificate because it's not about spending >180 days in Thailand since article 4 states that to be considered "resident" in the context of the treaty you should not be taxed only on local source income.

The fact that they are not enforcing it or the perception that they are not enforcing is to be seen now that Thailand switched to worldwide taxation you will be taxed on any cent remitted in Thailand (that's what US wanted).

Rest assured that if US sees that a treaty is abused or they feel they are getting the worst end of the deal they will terminate it without hesitation (see what happened to HU-US treaty).

"A person will not be a resident of a Contracting State for the purposes of the Double Tax Agreement, if they are liable to tax in that State only on income from sources in that State."

Translation: If, as a TH tax resident, you have only income from TH source then US-TH DTA benefits will not apply. Right?
Does perceiving foreign source income other than US make US-TH DTA valid?

Does "Being liable to tax" mean you must prove that you have paid an amount of tax > 0? (even if US dividends are properly declared, allowance/deduction/threshold may mitigate your tax bill to 0)

If so, when asked, how can you prove that you have paid tax on US dividend income in your country of residence as a simple tax certificate won't show this?
Do you need to provide a certified English translation of your local tax return as well?
If so, the foreign dividend income field will also be mixing all foreign dividends received not only from US...

To me, this is practically unenforceable.

 

[Marzio]

Translation: If, as a TH tax resident, you have only income from TH source then US-TH DTA benefits will not apply. Right?

If you have ONLY income stemming from Thailand then the US-TH treaty would not be of interestet to you because you will not have any offshore income.

Maybe what you wanted to say is if a Thai tax resent you have only income from US then US-TH DTA benefits will not apply? If yes then this is correct.

Does perceiving foreign source income other than US make US-TH DTA valid?

Nope, the thing that makes US-TH DTA valid is again if you pay taxes in Thailand on worlwide income.

If so, when asked, how can you prove that you have paid tax on US dividend income in your country of residence as a simple tax certificate won't show this?
Do you need to provide a certified English translation of your local tax return as well?
If so, the foreign dividend income field will also be mixing all foreign dividends received not only from US...

To me, this is practically unenforceable.

First of all W-8 BEN form asks for foreign ITIN to access the benefits of the treaty.

With the new remittance rule you will be taxed on any cent remitted in Thailand.

Thailand by closing the remittance loophole automatically makes the US-TH DTA enforceable because right now it's impossibile to receive income in Thailand and not have that income taxed.

 

[Mercury]

With the new remittance rule you will be taxed on any cent remitted in Thailand.

Thailand by closing the remittance loophole automatically makes the US-TH DTA enforceable because right now it's impossibile to receive income in Thailand and not have that income taxed.

At this stage, there is still no clarity and everybody including TRD is wondering on what and how new remittance rules will be implemented if it ever happens (they recently announced that offshore income/savings from and prior 2023 will be tax-free if remitted in 2024).

In any case, there are still legal ways to receive income tax-free in Thailand: gift, loan, LTR Visa tax exemption, remitting several years living expenses during a year one is not tax resident ...

 

[blanco]

I live in Thailand, I don't work but have a TIN number.
I trade through TD Ameritrade and they accepted my W8BEN document and only charging 15% withholding tax on dividends.

 

[Marzio]

How do you plan to avoid being taxed on those US dividends now?

 

[blanco]

I don't need to bring them into Thailand... if that's your point?

 

[Marzio]

Well you said you don't work so I presumed you will bring dividends into Thailand.

 

[blanco]

No I don't need to. I guess it's not what the OP was asking for but just wanted to clarify that you can get the 15% withholding tax accepted

I don't know whether Thailand is checking debit cards/credit card transactions or not, but an option may be to open an account with UOB or CitiBank in Singapore, have the dividends paid out to the account in Singapore and use debit/credit card for spending.

Regarding the W-8BEN,
Thailand and US have a TAX treaty and can be seen on https://www.irs.gov/pub/irs-trty/thailand.pdf
Under article 10, DIVIDENDS, paragraph 2, it specifies that a resident of "the other state", as long as not being a company, should not pay higher interest than 15% on dividend payments.