Citi bank paid $0.51 cents per share


I have a few Citi shares © (no fractionals) and only received $0.43 cents per share.

Should I have received $0.51 instead?

Can anyone help please?


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There is 15% US withholding tax deducted.

0.85 * 0.51 = 0.43


Unbelievable how that tax can be justified. But thanks for explaining. Cheers

Dividend tax rates paid by Americans range from 10% to 37% depending on overall income. In UK is it 7.5%, 32.5% or 38.1%.

The US withholding tax is fully deductible against UK tax, so for a UK person paying 32.5% or 38.1% the US tax has no effect on overall tax bill. I expect it works similarly in other countries.

I think the rationale is that as these are US companies, the US government should be entitled to similar tax revenue as it might have claimed if the dividends had been paid to US persons. However, this is US exceptionalism. The UK takes no withholding tax on dividends of UK companies wherever they are paid.

Furthermore, US corporation tax has higher rates then UK corporation tax, albeit with many tax deductions available to US companies.

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All right, that’s useful to know. I suppose this tax will always apply regardless of any regime I might be under in the UK e.g. an ISA account? In that situation, the respective US 15% tax will still be applied, correct?

Will this also apply for sales of shares?

Thanks for your insights @Richard.W. :+1:

Yes, tax will be deducted from US dividends paid in an ISA account and cannot be reclaimed or used to offset UK tax. In a SIPP the US tax can be reclaimed.

US withholding tax is also deducted invisibly from dividends collected by ETFs that hold US companies, and that tax cannot be offset against UK tax. That is why it is more tax efficient to hold a basket of US companies directly rather than within an ETF like VUSA.

Capital gains are different. They are only taxed by the county where the taxpayer resides, except for tax on an immovable asset (like real estate) which can be taxed by the country where it is located.

It is interesting that a UK company with a version of stock trading on the NYSE, such as Unilever (UL), has its dividend paid without any withholding tax deduction. Medtronic (MDT) is an Irish company in the S&P 500 trading on the NYSE and pays with 30% withholding taken by Ireland. But only 15% can be taken as a tax deduction by a UK taxpayer. Holders of this company do end up being double taxed, unless they apply directly to Ireland for the missing 15%, which is a faff few would want to engage in.


Once again, @Richard.W, thanks for clarifying. Happy investing!

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Such is the joyous life of an investor in the sense that if a company goes bust, you are at the bottom of the pecking order and as such almost zero chances of getting anything back after everyone has been paid out starting with the liquidator.

Unlike the olden days when a company assets are mostly tangibles (brick & Mortar) that can easily be sold, nowadays assets are filled with crap that can’t easily be sold in liquidation.

On the other hand if your investment does well, you get taxed for taking all the risk. Am not anti-paying taxes but we all know how this money gets spent :wink:

Health, welfare, environment, defence etc.

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Let’s just look at health

I could go on but don’t want to deteriorate this thread :wink:

Yes I think it’s always worth factoring in (if you cant claim/offset) when comparing dividend stocks, as chopping 15% could suddenly make a US stock less appealing than a US, for example current T and GSK yields not far apart after T gets taxed.

Interesting point. Something worth noting if I do open a SIPP.
Is it complicated to reclaim it? Have you ever done it?

It should be automatic. I have not done it personally, but AJ Bell say

You don’t need to complete either form if you hold your investments in an AJ Bell Youinvest SIPP. This is because when in a SIPP, US investments are automatically exempt from withholding tax and Canadian investments automatically benefit from a reduced withholding tax.

The forms they refer to are the W8-BEN and Canadian NR301.

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Great! :slight_smile:.
In that case, UK investors with a SIPP may want to prioritise having their USA dividend stocks in their SIPP as opposed to an ISA or invest account.
Assuming that they have USA dividend stocks, a SIPP and are not looking to require the dividend income in the short or medium term (eg. They don’t live off dividend income).