Taxation of US Dividend Income

[AyG]

For various reasons I've previously avoided investing in US stocks. Now I'm interested in doing so, but am having trouble understanding the taxation of dividend income for non-Americans.

The default situation appears to be that 30% tax will be withheld for non-residents/non-US citizens.

The Thai/US taxation treaty of 1998, article 10, indicates that US dividend income may be taxed in Thailand. However, it also indicates that up to 10% tax (15% in some circumstances) may be withheld by the US. The use of the word "may" here doesn't provide any clarity.

So, does the US withhold tax on dividend income for Thai-resident investors? And if so, at what rate?

Can this US tax be used to offset Thai income tax liabilities?

The income will be received by my broker in Luxembourg and kept offshore. Is it liable to Thai income tax?

Can anyone cast any light on this, please?

Thanks.

[wordchild]

your broker or, at least, their back office will know the answer to this. If you are not a US taxpayer then the amount deducted depends on where you are resident and the relevant tax treaty between your country of residence and the US. Depending on when you invested, your broker should have asked you to submit a W-8BEN form to declare your residency. I believe the withholding rate for a Thai resident is 15%. As I understand it, if they do not have a valid W-8BEN the tax withheld will be at 30%.

As to further taxation in Thailand the normal seasoning rules for income apply ie hold it offshore and don't bring it in in the year in which it was earned = no further Thai tax liability.

Edited October 10, 2013 by wordchild

[ExpatJ]

I just checked with my broker on this- 30% tax on dividends for US stocks , no capital gains tax. No thai tax, if your funds are managed outside thailand at least (im using singapore based broker).

[wordchild]

I just checked with my broker on this- 30% tax on dividends for US stocks , no capital gains tax. No thai tax, if your funds are managed outside thailand at least (im using singapore based broker).

checked this today with a Thai broker I use and he said 15% for a Thai resident where they have submitted a W-8BEN. As its a long time since I held a US stock myself I cant confirm from direct experience, but that's what he said (after he had checked with his back office). Edited October 10, 2013 by wordchild

[rayongchelsea]

I invest in us stocks. It is 15% having submitted the necessary forms.

[garyk]

Good information. Thanks all for posting.

[taxout]

The cap on US taxation of US dividends applies only to a "resident" of Thailand, and you have to look closely at the definition of "resident" to determine whether you qualify:

1. For the purposes of this Convention, the term "resident of a Contracting State" means any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, citizenship, place of management, place of incorporation, or any other criterion of a similar nature. The term also includes that State and any political subdivision or local authority thereof. The term, however, does not include any person who is liable to tax in that State in respect only of income from sources in that State."