BIP/BEP: Source Country of dividend income

Hello Community,

If by any chance someone has in his Portfolio:

BIP or BEP

https://bip.brookfield.com/stock-and-distribution/tax-information

https://bep.brookfield.com/stock-and-distribution/tax-information

I am trying to figure out if the source country will be Bermuda, Canada or US, for BIP:

I am a European resident. Is the distribution I am paid from Brookfield Infrastructure Partners subject to Withholding Tax?

While Brookfield Infrastructure Partners is a Bermuda partnership, its income comes from holding companies the partnership owns. At present, these holdings companies are either in Canada, US or Bermuda, and we do not expect this to change for the foreseeable future. The income Brookfield Infrastructure Partners earns from underlying subsidiaries includes dividends and interest paid by subsidiaries in jurisdictions that levy withholding tax. Since Brookfield Infrastructure Partners is a “flow-through” for U.S. and Canadian income tax purposes, a portion of the income may be subject to withholding taxes levied by jurisdictions such as the U.S. and Canada.

The rate of withholding varies, amongst other factors, depending on a holder’s country of tax residence, type of ownership account, and whether holders have provided their broker (or Brookfield Infrastructure Partners’ transfer agent in the case of registered unitholders) with the appropriate Internal Revenue Service (“IRS”) Form (Form W-8BEN, W-8BEN-E, W-8-ECI, W-8EXP, W-8IMY or W-9) and Canada Revenue Agency (“CRA”) Form (Form NR301, NR302, and NR303).

But

BEP terminology used:

I am a European resident. Is the distribution I am paid from Brookfield Renewable Partners subject to Withholding Tax?

If you are a European unitholder, the effective withholding tax rate on your distributions should be approximately 7.5% (approximately 50% of distributions multiplied by a 15% withholding tax). This rate is based on management estimates and will vary from year to year. Further, it is based on withholding tax rates for taxable investors in most European countries (UK, Ireland, Switzerland, Netherlands). Withholding tax rates may vary for tax exempt entities.

While Brookfield Renewable Partners is a Bermuda partnership, its income comes from holding companies the partnership owns. At present, these holdings companies are either in Canada or Bermuda, and we do not expect this to change for the foreseeable future. The income Brookfield Renewable Partners earns from underlying subsidiaries includes dividends and interest paid by subsidiaries in jurisdictions that levy withholding tax. Since Brookfield Renewable Partners is a “flow-through” for U.S. income tax purposes, a portion of the income may be subject to withholding taxes levied by jurisdictions such as the U.S.

Cheers,

:beers:

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I have both, but I have no clue about this :joy:

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Well doh :thinking:

Feedback so far from t212 support for BEP is either Bermuda 0% or Canada Withholding.

But if you don’t know which source country, how do you know if you are taxed correctly?

Unless for Canada/USA you have same rate, but still Bermuda is 0%…

I almost never check that to be honest… I’m lazy :upside_down_face:

As you pointed out, in the website it says “the effective withholding tax rate on your distributions should be approximately 7.5%”. This is also mentioned in presentation about BEPC in page 13 (50% Canadian dividend, 25% Bermuda dividend, 25% return of capital).

The total dividend was 0.5425 in March. We got 0.14 for return of capital and 0.34 for dividend. The gross amount of dividend should be 0.4025 (74% of the total amount, which agrees with announced percentages) assuming no tax on return of capital. This makes 15% withholding tax for the entire dividend.

For June distribution, total amount was again 0.5425. This time, we got same net amount for return of capital and dividend, that is 0.25. So, gross dividend was 0.2925. This makes %14 withholding tax but dividend was %54 of the total amount. So it appears that this time, Bermuda dividend is distributed together with return of capital without any withholding tax.

I don’t know why the March distribution was not correct, but the most recent distribution gives us a ~7.5% overall withholding tax.

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Since there was a correction about taxation of distributions from EPD, I wonder if the above situation can be checked as well.

@Martin, can you guys verify that BEP distributions for March were correctly taxed? The total distribution consisted 74% of taxable distribution while it should be ~50% according to the company and the most recent distribution.

It would literally not change anything for me as I had a very small investment in BEP at the time, but it can help others :smiley: