Dividend Taxation Query

Hello All,

I have been searching the forum for a definitive answer to my query but have not managed to find one thus decided to just make my own topic instead.

I am a UK Investor looking to invest in stocks in the following European Countries via T212:

Denmark (Not currently available on T212)
Finland (Not currently available on T212)
France
Germany
Netherlands
Switzerland

I am aware that the UK has ‘Double Taxation Treaties’ with them all stating that UK Investors are entitled to a specified witholding tax limit which in most of these countries is far less than what they normally take from you but my question is this:

Will T212, as my Brokerage, automatically fill in the necessary ‘Double Taxation’ Forms on my behalf or am I going to be taxed the higher taxation and have to manually request refunds every time I recieve capital gains/dividends from these Companies?

If it is the latter I will more than likely avoid investing in Euro-based Companies as that is a massive headache to have to deal with everytime I recieve any form of gains…

If the latter is true could we possibly use the workaround of adding the London Stock Exchange Tickers for the Euro-Based Companies to automate the process for us?

For example:

Adidas AG (LSE:0OLD)
Heineken NV (LSE:0O26)
Kone Oyj (LSE:0II2)
L’Oreal (LSE:0NZM)
Nestlé (LSE:0QR4)
Novo Nordisk A/S (LSE:0QIU)

If the answer is yes then I am happy to put in a request to have these added to the queue to be added in due course.

Thanks in advance to anyone who can clear things up for me!

-Matt

2 Likes

@IVIatty4123 Hi Matt. Currently, the latter is true, these double taxation forms aren’t automatically filled in.
As you said, a viable workaround is to add the LSE-listed versions of these EU securities, that’s something we can definitely do.
Please, place a request & we’ll add them as soon as we can.

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Hi David,

Thank you for your quick response, I will place a request to have them added now!

-Matt

@IVIatty4123 Apologies for the noob question. But would you be kind enough to clarify how the above suggested walkaround of adding the LSE tickets of a EU company would work in automating the taxation documentation process?

Thank you.
George

Hello @boi357 and welcome to the Community!

Now I wouldn’t take this as Gospel as I am not 100% sure if it will work and I am by no means a Tax Expert but my thought process is this…

Investing in the EU Security directly from it’s Home Exchange does not allow the ‘Tax Man’ to know you are eligble to the reduced tax rates under the relevant ‘Double Taxation Treaty’ unless you file a tax relief form annually which would be a headache. But, investing in the LSE Security for the relevant Company (As that is My Home Exchange) should, in theory, already have the reduced taxation applied because the ‘Tax Man’ should already know the Security is on a different Exchange to the Company’s Home Exchange and that the Exchange is in a Country that has a ‘Double Taxation Treaty’.

Again, this is all speculation as I have struggled to find a definitive answer thus far but time will tell, once the Securities have been added to T212 I can invest in them and see what rate my dividends are being taxed at then move onwards from there.

Tax is a Rabbit Hole that I am trying my best to avoid as much as I possibly can so having it automated would be amazing!

I hope this answers your question somewhat.

-Matt

1 Like

@IVIatty4123 Thank you for the prompt and comprehensive reply.

I did forget to mention that i am also dealing from the UK.
This is certainly an interesting take on the matter.
If I understand this correctly, the T212 platform would result in having (for example) the Adidas share listed in both the “original” ETR:ADS and the LSE:0OLD share. Giving the investor the opportunity/choice in dealing though which ever Stock Exchange he desires.

I understand that this is all speculative but this does sound like a viable “solution”.
I am surprised that T212 is willing to provide this service as this would solely benefit UK investors…

Thanks again Matt.
George

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@David What about US stocks? I was under the impression the double tax form is done automatically for us

@CaptainDangernoodle For US stocks it is.

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@boi357 You are welcome!

Yes, it would mean that we would have multiple Securities for the same Company on the Platform - In fact, there are a couple like this already. Take Unilever NV as an example:

Unilever NV (ENXTAM:UNA)
Unliever NV ADR (NYSE:UN)

There is also a lot of ETFs on the platform like this too.

If somebody from another Country was to ask the Team nicely to add the relevant Securities (and as long as they have access to the relevant Exchange) I am sure they will add it for them.

As the saying goes - “If you don’t ask you don’t get” :grin:

-Matt

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Thanks for asking this. Got my Bayer dividend today… £0.25p on a €2 dividend. Now I know why.

My english is not my first language so if i understood correctly, when the dividend from the us market comes in my account is automatically taxed???
Ex: i have to get 4$ normal , but if is automatically i’m gonna get like 1.45$ or something? so the only thing i need to do in my country is just to declare at the end of the year and not paying or i don’t even have to declare it?

Hi @R0k, welcome to the Community!

Yes that will likely be why, it sucks doesn’t it… I believe Germany automatically charge a ‘Witholding Tax’ of 26.375% when in fact we should only be charged 15%.

If this goes according to plan then perhaps requesting the LSE Security (LSE:0P6S) will resolve it for you next time round. :slightly_smiling_face:

-Matt

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Hi @Robert,

To my knowledge, when you sign up with T212 they will automatically submit the US W-8BEN-E form on your behalf so that any income from US Stocks is automatically taxed at the agreed rate with your Country (Most Countries are 15% but it is best to double check this for your own Country just in case).

Each Country is different and has their own set of tax rules in place so it would be worth doing some research on whether you will need to pay additional tax in your Country but in most situations they will have a ‘Double Taxation Treaty’ with the US which will stop you from having to pay tax twice.

Hope that helps.

-Matt

1 Like

Hello @R0k. For some reason this seems a bit extreme to me but I might well be looking at this incorrectly.

Wouldn’t a €2 dvidend in GER equal to the Raw dividend payable amount minus Witholding Tax amount (26.375% of payable amount), followed by a currency exchange and from that deducting the equivelant UK dividend tax? (according to personal tax class)
So according to the above that would be:
GER payable amount: €2 - (€2 x 0.26375) = €1.4725
UK taxable amount: €1.4725 x 0.88 £/€ = £1.296 (from this deducting 7.5, 32.1, 38.1% based on tax class)
How does a €2 dividend result to a £0.25 payed amount even after all deductions?

I am probably missing something, so i do apologies if this causes some confusion.

I am guessing he owns a fraction of a share.

I also have a question regarding dividend taxation as I have just received my first ever dividend. So I have received 0.33€ for my 0.78 share of AT&T (ticker T). I can see the dividend per share is 0.47$. However the declared one is 0.52$. So @George what is with that difference?

All US stocks have Witholding Tax of 30%, countries that have double taxation treaty with US have 15% withheld.

So 0.52$ - 15% = 0.442$

Some unfortunate like Croatia(only EU country without US treaty) pay 30% tax plus Tax in Croatia.

2 Likes

I did some digging and apparently the tax for Romania is 10% hence the 0.52$ - 10% = 0.47$. The next question… do you declare this annually (even as it is reinvested) or do you do it whenever you withdraw something from the account?

Well it depends per country.

Don’t think every country has same tax legislation.

In Croatia we have to pay dividend tax on payout. Also annual report of capital gains + dividends…

Hi Boi357, thanks for your reply. I had done some maths myself too before coming here and it didn’t made sense either as I own 1.19 share. I’ve only got very short notification on my phone saying Bayer paid €2 dividend per share and all I have on my account is those 25 pence.

Just for info I do have NIN and pay tax solely in the UK as per PAYE… I am just as confused as you but I’m not really bother atm as I’ve just started investing. Although for future investment I think I’ll stick to UK and US stocks :slight_smile: