Taxes from dividends on American promotions, how can they reduce them

It is no secret that today almost all investment income options are subject to taxation, this applies to both interest on deposits and dividends on companies.

Moreover, taxes from dividends depend on whose shares you buy, for example, if you buy shares of American companies, they will be made in accordance with the law of the United States.

And today, dividends paid to foreign investors on American shares are taxed at a rate of 30%.

That is, when calculating dividends, an amount of 30%is automatically charged from you. For example, you have charged payment in the amount of $ 500 for PFIZER shares, and only $ 350 will come to the account.

But with all this there is one nuance, this is an agreement to avoid double taxation between the United States and a number of countries:

Ukraine, Kazakhstan, Poland, Belarus, Russia, Moldova, Azerbaijan, Armenia, Georgia, Uzbekistan, Kyrgyzstan, Tajikistan, Turkmenistan, Germany, France, Italy, Spain, Japan, China, India, Australia, Brazil, Switzerland and others.

Therefore, if you are in the USA, you have the opportunity to reduce tax to 15%, for this you need to file a W-8BEN declaration.

If you live in another country, then there are options for reducing the tax on dividends on American actions if the tax rate in your country is lower than in the USA:

I immediately wanted to note that you do not receive a refund, but only reduce the amount of taxation for the reporting reiod.

Consider the example of countries such as Ukraine, Poland and Kazakhstan.

In Ukraine : dividends from foreign companies are taxed on personal income (personal income tax) at a rate of 18%and a military training camp in the amount of 5%, which is 23%in total.

The test of tax paid: an agreement to avoid double taxation between Ukraine and the USA allows you to test the tax paid in the USA when calculating taxes in Ukraine. That is, when filling out the tax return, the tax can be reduced by 7%.

In Kazakhstan : dividends from foreign sources are taxed by individual income tax (IPN) at a rate of 10%.

The test of tax paid: the agreement between Kazakhstan and the United States allows you to test the tax paid in the United States, when calculating taxes in Kazakhstan. In the case of submitting a declaration, it is already possible to reduce the tax from dividends by 20%.

In Poland : dividends and interest income are taxed at a fixed rate of 19%.

The test of tax paid: the agreement between Poland and the United States allows you to test the tax paid in the United States when calculating taxes in Poland. After you indicate the taxes paid in the declaration, the offset will be 11%.

It should be noted that before filing a general tax return, there may be a demand to submit a declaration of income from foreign investment, for example, in Poland it is Pit38.  

True, to speak with the confidence that the excessively paid taxes will not be completely returned to you, so you can turn to another investment option in the action.

Reduction of taxes from dividends by shares through CFD

You can also buy dividend shares with the help of contracts for the difference in CFD price and dividends will also be paid as with a regular purchase ..

At the same time, taxation of received dividends will occur only at the rates of your country, since brokers do not charge taxes if you trade in CFD.

That is, you will receive $ 500 dividends for PFIZER shares and pay not $ 150, but depending on the country:

• In Ukraine - 115
• In Kazakhstan - 50
• In Poland - 95
• In Moldova 30

Which is almost always significantly lower than with a standard purchase of shares even taking into account the fee for transferring the positions of swap.

You can buy dividend shares through contracts for the difference for the following brokers - CFD Brokes Trading Black Sea