Why T212 is paying less dividend

Like I said @CavanHaganInvesting s answer is correct you get taxed 15% withholding tax at source, and this is paid automatically. you don’t have to declare this further because they are not taxed in UK hence there is no chance of double taxation.

I appreciate I’m not being double taxed! But ISA ‘s are free of UK tax.
I believe that you are saying is this US withholding tax is not recoverable even though it’s via an ISA?

Tax for US dividends is 10% for Romanian citizens, if anyone is interested.

It is 10%

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Thank you and sorry. It is mistype. I corrected it now.

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The US withholding tax can be mitigated via ETFs. If the ETF is domiciled in Ireland (as many are) then the withholding tax is 15% instead of 30% due to double taxation treaty.

Unfortunately, investing via SIPP or ISA makes no difference to US withholding taxes on dividends. They only shield you from tax within your own country.


Just pasted the HMRC documentation and rules like 3 posts above this.
You do NOT pay withholding tax for US inside a SIPP.

If your provider is charging you, you are being ripped off. See whole dividends paid just 2 days ago in following screenshot. 0.24$ per CHD

image

Sorry, I confess I hadn’t fully read the whole thread. I stand corrected.

I’m now at lost regarding your screen shot or withholding tax in an ISA’s!! Perhaps T212 can confirm and make it clearer in dividend statements?

If I am not mistaken, @kali is referring to SIPP, however you are asking about ISA. Which is not "protected " from withholding tax as far as I understand.

But yes, we are all waiting for clearer Dividend payment display.

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The withholding tax rate depends of your country of residence.

See the tax rates here:

If the tax rate is 30% you should receive $0.196 per share (70% from $0.28).

If you reside in Bulgaria or Romania the tax rate is 10%.

If you reside in UK the tax rate is 15%.

US is one of the several countries which make withholding tax to work seamlessly when using a good stock broker.

If you buy stocks of German company or French company - they charge you with the maximal tax rate and you need to pay more to get your overpaid tax back. And this in many cases cost more than the amount of tax you are receiving back. In example: French Withholding Tax Reclaim

This is why I would not buy individual stocks from Germany or France. If I want to invest in these stock markets I would buy ETF - it’s more tax efficient, because the ETF managers are dealing more efficiently with the tax issues than the individual investor can.

Here is an answer from Xtrackers to my questions about the tax efficiency:

The “Xtrackers DAX UCITS ETF 1C” (ISIN: LU0274211480) qualifies as an investment fund for German tax purposes. Every investment fund (whether it is based in or outside of Germany) is subject to a 15% withholding tax rate on particularly German dividend income. Thus, any German dividend income paid to the Luxembourg based DAX UCITS ETF is subject to a 15% withholding tax rate, i.e. 85% of the dividend will be accrued at fund level. This 15% rate is also in line with the Double Taxation Treaty rate between Germany and Luxembourg.

As the Xtrackers DAX UCITS ETF 1C has provided a so called status certificate to its depository the 15% rate is applied automatically once the dividend is paid to the fund and, thus, no additional costs are incurred for refunding withholding taxes in Germany. However, if there should be - erroneously – a 26.375% rate applied by any paying agent (eg Clearstream or the funds depository) a refund procedure would not produce any costs for the fund or its investors, i.e. any expenses caused by such a mistake would be included in the fund’s total cost rate of 0.09%.

The entire article I wrote in my blog (Bulgarian): Защо може да не е добра идея да се инвестира в отделни европейски акции?

However for ETF dividend in most EU countries you have to pay dividend tax in your country of residence, so dividend is in reality ETF pay 15% Witholding + ETF holder pays Dividend tax in country of residence.

Not very tax efficient either…

also it is a very convoluted way to navigate your tax.

I want a few good companies per se Airbus, I have no interest in buying 30-100 more companies coming attached to this.

This is why I would prefer accumulating ETFs (ETFs not paying dividends to the owner, dividends from shares are reinvested). This way the owner does not pay dividend tax in his home country because there is no dividend to be taxed. And the dividends from the stocks are taxed only once with the tax rate according to the double taxation treaty between the countries where the company paying dividend is located and the country where the ETF is domiciled. This tax rate cannot be achieved by regular small investors if they buy the shares directly (if the shares are from companies in France, Germany and other countries with bad withholding tax on dividend regulation).

Тhis problem of dividend tax overpayment does not arise with shares from US, Canada, Netherlands.

Actually that is not true, accumulation ETFs just reinvest the dividend paid. I believe Portugal from EU has no taxation on Acc ETFs however most of EU countries you still have to pay the dividend tax in your home country on top of 15% withold.

I said exactly that:

This is why I would prefer accumulating ETFs (ETFs not paying dividends to the owner, dividends from shares are reinvested).

The dividends from stocks are received by the fund and taxed according to the double taxation treaty between US and Ireland (where the ETF is domiciled) for example (15% withholding tax).

When you sell the ETFs you may need to pay tax on the profit. In Bulgaria there is no tax for this if you trade the ETFs on European regulated exchanges.

In case there is no exemption for taxation all the income will be taxed, so it would be effectively double taxation. This is why I would not buy ETFs traded on US exchanges. If I do this I would pay 10% tax (or even 15% in some cases) on the difference between sale price and purchase price, effectively paying tax on the already taxed dividends (I don’t know if there is some exception for the US ETFs).

Do US ETFs pay 30% dividend withholding tax? If this is the case I can’t imagine why anyone outside US would buy US ETFs (ETFs traded on US exchanges and domiciled in US). Ireland-domiciled ETFs pay 15% tax on US dividends.

BTI is the ADR, go buy BATS - the primary UK listing for no tax.

The company has multi listings, you can look this up online too.

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Well…

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