I understand _ALL_ foreign natural persons as well as foreign corporations are affected by US withholding taxes on dividends and interest. The question is: Can we get the taxes "back" somehow? Let's say I have an account with a US broker and use my Bahamas corporation which owns a bunch of US dividend stocks. These pay dividends every quarter, the broker keeps x% withholding tax and remits it to the US IRS. Is there any way to ever recover these (lost) funds? Is there any legal way around this type of taxation? I used the search here on the forum and couldn't find any answers to this issue. Thanks in advance.
Fill out a W8-BEN form and submit it to your broker. This says you are not a US citzen and are exempt from the dividend and interest income withholding tax. Available from the IRS or your broker.
Actually nor true for most brokers. IB Canada withholds 15% on ALL US dividend income for ALL accounts... (I have several very different accounts)... IF one fills out one of 3 different W8 forms... And withholds 30% if you DO NOT. You cannot ever, ever get the withheld funds back... But Revenue Canada will give you a dollar for dollar tax credit for money withheld by the US government... So ** if you pay taxes ** it's a complete wash. This is possible ONLY because Canada has a tax treaty with the US. If you country does not... You will get the full US withholding treatment in the 30% range. Why does the IRS do this? This is the only way to prevent US citizens... From opening foreign brokerge accounts as a ** tax evasion strategy **.
HoundDogOne thanks for the post. And let me guess, it doesn't make a different if the account is held by a non-US natural person or a non US-corporation!? Sucks to lose out so much on the dividend income!