2024_withholding_tax_per_country

Dividend Tax Withholding Per Country: The Differences in Rates and Rules

The start of the new year is an ideal moment to review how you navigate the withholding tax landscape. Evaluating and fine-tuning your strategy now can play a pivotal role in enhancing your investment performance throughout the year.

 

Where to start?

Securing withholding tax relief at the source comes with its own set of deadlines. It’s not just about having the right documents; it’s about making sure they reach the right custodian or paying agents by specific dates for timely relief. Staying vigilant and proactive in pursuing relief at the source is key. With this guide, we aim to simplify the complexities, empowering you with knowledge to make informed decisions and set a solid financial foundation for the year ahead.

Most countries levy a withholding tax on the payment of dividends. However, the rates vary from 5% to 35% – sometimes even more – depending on the country. 

A dividend withholding tax is levied over the gross amount of the distribution, which means that expenses related to holding the shares or collecting the dividend income are not taken into account.

 

The risk of double taxation

As the recipients of the dividends are generally subject to taxation in their own country of residence as well, there is a risk of double taxation: once in the country where the dividend originates and then again in the country where the dividend is received. 

Bilateral tax treaties (also known as double tax treaties) seek to reduce this risk by providing rules for withholding tax relief.


Many countries have concluded bilateral tax treaties under which they voluntarily and reciprocally reduce the rates that normally apply under their domestic tax laws, to stimulate cross-border investment between the countries involved, by reducing (double) taxation on investment income and consequently the cost of investment.

2024 Updates on Double Tax Treaties around the World

  • Effective Date: 01.01.2024
  • Withholding Tax Rates:
    • General: 15%
    • Pension Fund: 0%
    • Government Entity and Central Bank: 0%
  • Effective Date: 01.01.2024
  • Withholding Tax Rate: 15%
  • Effective Date: 01.01.2024
  • Withholding Tax Rates:
    • General: 15%
    • Pension Fund: 0%
  • Effective Date: 01.01.2024
  • Withholding Tax Rates:
    • General: 15%
    • Pension Fund: 0%
  • Effective Date: 01.01.2024
  • Withholding Tax Rate: 15%
  • Hungary-United States
  • Denmark-Russia
  • Norway and Barbados, Curaçao, Jamaica, Sierra Leone, and Trinidad and Tobago.

Ordinary treaty residents

The most common tax treaty rate for “ordinary treaty residents” on dividends is 15%, which is lower than the domestic withholding tax rate of most countries. 

Ordinary treaty residents do not meet any conditions other than:

  • Being a treaty resident: meaning they are fully liable to tax in their country of residence.
  • Being a beneficial owner of the income received: meaning receiving the income for your own benefit and enjoyment (i.e. not receiving it for another person as their agent, nominee, or conduit).

Sometimes and subject to certain conditions, dividend withholding tax may be reduced further or even eliminated entirely, either by the exemption at source (no withholding tax is withheld in the first place) or by refund (withholding tax is withheld but subsequently refunded upon request).

 

Statute of limitations

The statute of limitations is the timeframe within which one can file a withholding tax (WHT) reclaim. Every country has its unique statute of limitations, i.e. a designated period during which investors can request WHT reimbursement. Once this specified term expires, the chances to reclaim the withholding tax come to an end.

Click here for more information on the withholding tax reclaim policies of specific countries:

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