Taxation of dividends and how to reduce it to a minimum

Investments in securities have long become one of the most attractive investment options.

After all, if you successfully choose an investment object, you can make a profit not only from the increase in the value of the stock, but also from the accrual of dividends.

Moreover, if you invest money in a foreign company, then you will receive dividends in foreign currency, usually US dollars.

This type of income, along with other income of individuals, is also subject to taxation and this issue should not be ignored.

Taxation of dividends is a rather complex topic and you often have to solve this problem yourself without waiting for the relevant authorities to help.

Dividend tax rates

Today, your income can be taxed at a rate of 0 to 30 percent, it all depends on which country you receive the payment in and which country you are a resident of:

In Russia , the rate is 13% for residents and 15% for non-residents of the Russian Federation.

In the USA, a resident will have to pay up to 30%, in the same case, if he is a foreign resident, he will pay taxes in his home country.

In Ukraine , citizens and residents currently pay 5%, but it is planned to raise the rate to 18%.

In other countries , the range is quite wide; when taxing dividends, you will have to pay from 0 to 40%.

How to pay, the technical side of the issue?

Once you have found out at what rate you will have to pay taxes on the money received, you still need to complete this procedure technically.

The easiest way is when the inversion fund or the bank through which you bought the shares does this for you. In this case, when transferring to your account, the company intermediary will deduct the required amount and you will only have to submit a tax return.

In the same case, if you need to pay taxes on dividends yourself, you should find out at your place of residence the account number into which taxes are paid from individuals.

After checking with the tax authority itself whether you have found out everything correctly, usually for these purposes there is a special telephone and consultation room at the tax office itself. Then we transfer the funds and make sure to indicate that this is a tax on dividends and our data.

This must be done in the same month when your income was accrued, otherwise it will turn out that you are late in payment.

If such a task seems difficult for you, then it is best to use the services of a professional tax consultant.

At least for the first time, so that he could explain in detail the action plan and help find the account number for payments. Reducing taxation of dividends

One of the most popular ways to reduce tax on dividends received is through residence in certain countries.

It is no secret that citizens of countries such as Saint Lucia, Antigua and Barbuda, Dominica, Grenada and many other island states exempt their citizens from paying tax on dividends received outside of these states.

That is, here dividends are taxed at a rate of 0%, the main thing is that the shares belong to a company not registered on the island of which you are a citizen.

Citizenship of the listed countries can simply be purchased or obtained through investment in real estate.

The price tag starts at $100,000. As a result, in a couple of months you become a citizen of a given state and pay taxes according to its laws. At the same time, you do not need to renounce your native citizenship and live in the country.

Here it’s up to you to decide whether to pay a certain percentage of tax on dividends or buy foreign citizenship and pay nothing.

It all depends on the size of the amounts charged and your preferences.