The Lemon Fool

Are there any links to Witholding Taxes by country for UK investors, particularly in SIPPs? I can't seem to find anything on Google.

My understanding is SIPPS ought to be free of these taxes - as they are recognised pension vehicles (unlike ISAs). But, it doesn't necessarily mean a particular broker has the wherewithal to comply with this. Or possibly that all countries apply the rules, though you should be OK with US shares.

The broker's detailed report on dividend payments should show any applied taxation.

Here is some information, I don't know if it helps:

https://www.simplysafedividends.com/intelligent-income/posts/31-foreign-dividend-withholding-tax-guide
https://www.spglobal.com/spdji/en/documents/additional-material/withholding-tax-index-values.pdf

I expect it may come down to the particular share involved and also the broker you use. Have you tried asking them?

XFool wrote:My understanding is SIPPS ought to be free of these taxes - as they are recognised pension vehicles (unlike ISAs). But, it doesn't necessarily mean a particular broker has the wherewithal to comply with this. Or possibly that all countries apply the rules, though you should be OK with US shares.

The broker's detailed report on dividend payments should show any applied taxation.

Here is some information, I don't know if it helps:

https://www.simplysafedividends.com/intelligent-income/posts/31-foreign-dividend-withholding-tax-guide
https://www.spglobal.com/spdji/en/documents/additional-material/withholding-tax-index-values.pdf

I expect it may come down to the particular share involved and also the broker you use. Have you tried asking them?

AJ Bell can eliminate this for US shares but only can reduce it for Canadian dividends and there's a full 30% whack on Australian shares. They've said this is because of the double tax treaty treatment, and I'm inclined to believe them as there are different treatments for different countries.

My understanding is also that the UK/US tax treaty has the US seeing/recognising UK SIPP's as pension fund and exempting withholding taxes accordingly. For others, the tax treaties and withholding rates are all as per any (or no) agreement (treaty) between that country and the UK.

Witholding tax rates tend to be consistent for each country, so referencing that data is relatively straight forward

https://www2.deloitte.com/content/dam/D ... -rates.pdf

For any adjustments, such as per UK/US tax treaty, you'd have to reference each individual tax treaty https://www.gov.uk/government/collections/tax-treaties so you'd need to find a UK published web page with such summary detail, relevant to the UK viewers only, and I don't know of any such web page.

I suspect that the US arrangement of permitting pension fund (SIPP) exemption to be more inclined to be the exception rather than the rule.

Another factor to keep in mind is that there can be other less obvious taxes, for instance a UK investor holding north of around $60,000 (can't recall the exact figure, too lazy to look it up), will fall into US estate tax (death duties) reporting i.e. the funds will be frozen until after the correct reporting and any tax due having been paid. US estate tax is pretty generous, around $11M+ before any tax falling due IIRC, and again as part of UK/US treaty UK residents also might benefit from that, BUT only if you correctly file at the right time using the right forms and correctly complete those forms, otherwise like others, the taxation rate can be quite punitive. Heirs might miss that, fall outside of the required timescale, or use the wrong form(s), or not correctly complete the forms.

No information on European countries? And whether brexit nonsense might hurt investors there?

UncleEbenezer wrote:No information on European countries? And whether brexit nonsense might hurt investors there?

As far as I know, there have been no changes in European countries, whether the UK, Denmark, Scandinavia or the continent, but there may be changes due to EU rules.

The SEPA transfer rules are the same. I routinely transfer from Italy to my investments in the UK and no problem whatsoever.

As I have said many times, the biggest problem is with the UK banks that still live in the 1950s and even before Brexit, regard Dover as the end of the world.

Steve

Try this. Pretty comprehensive:
https://assets.publishing.service.gov.u ... l_2018.pdf

There seems to be plenty of links suggesting that dividends of US share destined for a UK SIPP should be paid without any deduction of withholding tax.
Indeed, one link claims AJ Bell can do this.
However, when I asked them recently, they claimed that US companies "must withhold the tax at the time they pay the income to a foreign shareholder".
This all seems to be a bit of a grey area,
So my question is - has anyone out there received any US dividend without deduction of any withholding tax within a SIPP and, if so, through which broker?

StayinAlive wrote:There seems to be plenty of links suggesting that dividends of US share destined for a UK SIPP should be paid without any deduction of withholding tax.
Indeed, one link claims AJ Bell can do this.
However, when I asked them recently, they claimed that US companies "must withhold the tax at the time they pay the income to a foreign shareholder".
This all seems to be a bit of a grey area,
So my question is - has anyone out there received any US dividend without deduction of any withholding tax within a SIPP and, if so, through which broker?

A SIPP is a pension fund, different to a investor. US/UK tax treaty permits US to not withhold dividend taxation when paying the dividend into a pension fund - pay gross dividends. But has to be registered such as Form 8621. In such cases typically funds are taxed on the way-out, not on the way-in. I don't have a SIPP myself but recall others saying that they had received gross US dividends in their SIPP, so seemingly valid. Conceptually future US regulations could make tax claims against a SIPP in drawdown. US tax rules are a can of worms, expansive and of course dynamic.

StayinAlive wrote:There seems to be plenty of links suggesting that dividends of US share destined for a UK SIPP should be paid without any deduction of withholding tax.
Indeed, one link claims AJ Bell can do this.
However, when I asked them recently, they claimed that US companies "must withhold the tax at the time they pay the income to a foreign shareholder".
This all seems to be a bit of a grey area,
So my question is - has anyone out there received any US dividend without deduction of any withholding tax within a SIPP and, if so, through which broker?

Whilst I would hate to contradict AJB, dividends paid in to my AJB SIPP from US firms pay at the full payment rate and explicitly state

Tax GBP 0

Something worth watching is that some brokers 'remove' WHT from the pay rate, so it may not always be clear how much WHT you are paying by looking at a casual 'you've received a dividend' notification. So for example they might inform you of a dividend of 80c on 1000 shares for a total of $800, when in actual fact the company paid a $1 dividend subject to a 20% WHT.

Rates vary, as do brokers willingness to take advantage of reductions or eliminations. As far as I'm aware the only country you can dodge WHT from by sticking the shares in a SIPP is the US, but reduced rates can be attained from countries like Canada by lodging the correct details/paperwork with brokers who can be bothered.

It is however an area which CS often doesn't understand. I have in the past ended up working out how one broker was offering reduced rates of Canadian WHT on the submission of American paperwork, and then explaining it to them in an attempt to get them to confirm that their claims made any sense, or were likely to be any way legal. I convinced myself it was legal, but it's difficult to take much confidence from the assurances of someone who clearly doesn't understand why.

StayinAlive wrote:There seems to be plenty of links suggesting that dividends of US share destined for a UK SIPP should be paid without any deduction of withholding tax.
Indeed, one link claims AJ Bell can do this.
However, when I asked them recently, they claimed that US companies "must withhold the tax at the time they pay the income to a foreign shareholder".
This all seems to be a bit of a grey area,
So my question is - has anyone out there received any US dividend without deduction of any withholding tax within a SIPP and, if so, through which broker?

Yes Interactive Investor do this for me. US dividends in my pension fund get paid completely free of any withholding tax into my account.

It is technically not the II SIPP product. I had a SIPP with Eqi for which Curtis Banks were the trustee and this moved seamlessly across to II from Eqi when they acquired the business, So it shows up as a "Pension Trading Account" within the II product range ( as opposed to their SIPP product) but in all respects is is the same product. I had to sign a few forms after the transfer was complete and was pleased to learn that I all dividends paid my my US companies ceased being taxed at all ( which was not the case when this was held at Eqi).

Also since II allow multiple currencies in a Pension account, the dividends are paid and held in dollars at II.