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Tax taken abroad

A dividend from abroad is often taxed twice: where the company is, and where you live. Part of it can usually be saved.

Taxed at the source

The country of the company keeps part of each dividend before it reaches you. The US keeps 30%, or 15% if your broker has your W-8BEN form, which says you live in a country with a tax treaty.

Reclaiming

Some countries keep more and let you claim part back. Switzerland keeps 35%; with a treaty you can usually reclaim down to 15%, through a form and some patience. Many people find it worth doing only for large dividends.

Then at home

Some countries, like Germany, count the tax kept abroad against your own, up to the treaty rate. Others tax what arrives: in Italy the 26% applies to the dividend after the foreign tax, so both are paid.

Inside funds

A fund also has dividends taxed at the source, and you cannot reclaim it. That is one reason where a fund lives matters: it decides which treaty applies.

Key takeaways

  • Foreign dividends are usually taxed where the company is first, then at home.
  • A W-8BEN form cuts US tax on dividends from 30% to 15% for treaty countries.
  • Inside a fund, the fund’s home decides the rate.