A recent dividend received has had a 19% WHT applied.
My trading is carried out through a 212 Stocks and Shares ISA (UK based), so I was under the illusion all dividends and profits were tax free as stated on the GOV.UK website.
The stock in question IAG, is trading on the London stock exchange. But dividends are paid in Euros, and they are headquartered in Spain.
My questions are:
How is it calculated to be 19%
Is the WHT set by / being paid to Spain or UK
Am I required to pay WHT as a UK resident from a dividend trading on the LSE
Or do I have to apply for a reimbursement
Any light shed on this situation would be much appreciated, many thanks
I’m don’t know the specific situation with regards to withholding tax on IAG but, as I understand it, it’s ultimately a Spain-registered company.
It’s generally standard to pay it on some foreign holdings even within an Isa. I hold a few Dutch and French companies, for example, and withholding tax is due at varying rates set by those countries.
You do get a lower rate for US companies in an ISA. Another tax treaty means you don’t pay withholding tax on US stocks held in a Sipp.
IAG is a Spanish-domiciled company, even though it trades on the London Stock Exchange.
Spain’s WHT rate for non-resident investors is 19% for UK residents under the UK-Spain Double Taxation Agreement (DTA). This overrides the ISA’s usual tax-free status because the tax is applied at source (i.e., by Spain before the dividend reaches your account).
The 19% is set by Spain (not the UK) and is paid to the Spanish tax authority.
The UK’s tax-free ISA wrapper only protects you from UK taxes (like dividend or capital gains tax). It does not override foreign WHT unless the DTA explicitly exempts it (which, in this case, it doesn’t).
