Withholding on stock dividends

Discussion in 'Trading' started by 21Capablanca21, Nov 29, 2012.

  1. Im thinking about opening an account at Interactive brokers.

    Unfortunately they havent been able to give me an answer regarding withholding on stock dividends.

    I am a swedish citizen and Interactive brokers is an american company and my question was what happens if i buy stocks in asia or europe where the country have, say, a 30% withhold on stock dividends.

    They gave me this answer

    "The US IRS only collects dividend withholding from your Interactive Brokers account"

    "US tax law requires the withholding of tax for non-US persons (non-resident aliens) at a rate of 30% on payments of US source stock dividends, short-term capital gain distributions and substitute payments in lieu."

    The tax on dividends in sweden is 30%. Lets say i use my account at Interactive brokers and buy a stock on the Paris exchange and get dividends on this stock.

    First the french keep their share of this dividend, then the US IRS takes 30 % and then there is the swedish tax.

    Im able to provide information to the swedish IRS which states that i already have payed >30% tax and therefore there will be no tax in Sweden.

    But i am still being taxed twice...both in France and USA, right?

    If im right about this, and thats the case, the dividends i will receive using Interactive Brokers will be a lot less than i receive at my swedish broker where i always will get the withhold payed back to me and never will be taxed more than 30% on dividends.
  2. luisHK


    AFAIK , using IB as well, the US witholding tax is only for US based companies, or at least stocks traded on US exchange, it doesn't apply to dividends received from french stocks. Also if there is a tax treaty between US and Sweden (there should be one), after filling your W8ben form, you will be witheld on US based dividends according to the tax treaty (might be 10 or 15 or 20% rather than 30%) than you will have to pay whatever left is due to Swedish tax authorities, but IB doesn't get involved in that part.

    On a totally separate note, as it's one of our prospective Xmas holidays destinations, I've checked the weather forecast and webcam today and Stockholm looks pretty cold and snow covered at the moment. Any additional input on wether a white christmas is expected this year ?
  3. Thanks :)

    Thats what i thought. Anything else would be crazy imo.
    And i also, finally, got a better and easier to read answer from IB which states the same as you do so now i feel comfortable opening an account there.

    Its really cold now, and snowing.

    Next week, 10-12 december, the forecast says it will be warmer, -1-3 degrees but still snowing.

    Id say its pretty likely there will be a white christmas this year but i would wait 10-14 days to get a more reliable forecast.
  4. luisHK


    Thanks for the update, we'll keep checking , and good luck for your trading in Stockholm - quite a pleasant city