If i am a long term investor of a dividend paying stock, but i don't want to pay the dividend tax for non-US citizen. What is the best way to avoid it? The strategy i have in mind is sell it at 15:59 on the ex-dividend date and buy it back at 16:01. Is that doable? Is after hours on the same date considered pass the ex-dividend date? And will the market at 16:01 drop by roughly the same amount of the declared dividend?
Fill out and file a W8-BEN with your broker. It informs the US government that you're not a US citizen, which takes away their authority to tax you.
If the stock has SSFs then you can use it and no tax. otherwise the only way I found is the way you describe, which works but there might be tax problems and the commisions
Can somebody confirm this? Will this effectively STOP your broker deducting the withholding tax on US dividends or will it only enable you to "reclaim" those taxes paid in the US with your home tax authority?
it might lower the rate if your country has a treaty(mine doesnt) but there will still have a 15% or so tax. I believe you can try reclaim at your country pretty much no matter what, w8 or no w8 but there needs to be a treaty
I don't think you can stop the government from taxing you by filling out the form. I think the law states there is a 30% tax withholding for non-US citizen from dividend issued by US corporation.
I know u can use SSF, but if we are talking about the Q's or the SPY, then i guess the only way to do it was just what i described
I stand corrected - W8 is for capital gains taxes and releases that 30% government withholding for non-US citizens. If there is a trade agreement between the countries all you can do is offset dividend withholdings at the end of the year against your taxes. Closing out and re-opening your positions, like you say, makes sense if you don't mind the commish charges.
Just a heads up the Spy ETF is Listed to Trade as a SSF. The QQQQ is also being negotiated to trade as a SSF but don't have any date yet for that one