Hong Kong vs Singapore

[Oxx]

It's true that dividends are taxed at 30% and there is no getting away from that.

I presume we're talking about dividends on US stock here, in which case there is getting away from the 30% tax. If you hold the stock in, say, Luxembourg, there's a tax treaty between Luxembourg and the US that means that US dividends are only taxed at 15%. This can make Luxembourg a much more attractive location to hold US investments than Singapore. And, in my experience, brokerage and custody costs are also lower in Luxembourg.

[Thailand J]

It appears that Thailand is also on the list of countries with tax treaty with US, please see Table 9-1 Pub 519 here:

https://www.irs.gov/publications/p519/ch09.html#en_US_2015_publink100042376

You may also reduce the 30% tax on social security benefits but do you need to be a resident or citizen of Luxemburg or Thailand to claim the benefits ? or just buy US stocks through a broker there? What kind of visa would establish my residency?

…or just move your money into Berkshire Hathaway, Buffett doesn’t pay dividends

[Naam]

what part of

You may need to file Form 1040NR if you:

• were a nonresident alien engaged in a trade or business in the United States,
• represented a deceased person who would have had to file Form 1040NR, or
• represented an estate or trust that had to file Form 1040NR.

is it you people don't understand?

I am not understanding why Merrill Lynch in the US withheld tax on options and shares I sold last year when they know that I am a non resident alien. If they were incorrect, then I need to file a 1040NR to get a refund. ,any also be time to change broker.

these things are handled in the back-office of a bank or a broker. shit mistakes happen. claim what is due.

[Naam]

It's true that dividends are taxed at 30% and there is no getting away from that.

I presume we're talking about dividends on US stock here, in which case there is getting away from the 30% tax. If you hold the stock in, say, Luxembourg, there's a tax treaty between Luxembourg and the US that means that US dividends are only taxed at 15%. This can make Luxembourg a much more attractive location to hold US investments than Singapore. And, in my experience, brokerage and custody costs are also lower in Luxembourg.

you don't "hold" any U.S. assets in Luxembourg even if your bank is located there. these assets are held by individual U.S. custodians who are also payment agents. your bank is only the book keeper. and that applies to Singapore or any other country too.

moreover, the tax treaties are referring to residency of the beneficiary.

[Oxx]

It appears that Thailand is also on the list of countries with tax treaty with US, please see Table 9-1 Pub 519 here:

https://www.irs.gov/publications/p519/ch09.html#en_US_2015_publink100042376

You may also reduce the 30% tax on social security benefits but do you need to be a resident or citizen of Luxemburg or Thailand to claim the benefits ? or just buy US stocks through a broker there? What kind of visa would establish my residency?

…or just move your money into Berkshire Hathaway, Buffett doesn’t pay dividends

Each tax treaty has its own details. Not all countries with a tax treaty get the 15% rate on dividends. It varies by country. You need to read the details.

Buying stocks most certainly won't get you the tax benefits of being resident/citizen of another country.

[Thailand J]

It's true that dividends are taxed at 30% and there is no getting away from that.

I presume we're talking about dividends on US stock here, in which case there is getting away from the 30% tax. If you hold the stock in, say, Luxembourg, there's a tax treaty between Luxembourg and the US that means that US dividends are only taxed at 15%. This can make Luxembourg a much more attractive location to hold US investments than Singapore. And, in my experience, brokerage and custody costs are also lower in Luxembourg.

you don't "hold" any U.S. assets in Luxembourg even if your bank is located there. these assets are held by individual U.S. custodians who are also payment agents. your bank is only the book keeper. and that applies to Singapore or any other country too.

moreover, the tax treaties are referring to residency of the beneficiary.

For someone who is not a citizen of US nor Thailand, who is on a retirement extension visa, live in Thailand year round except a few days out every few months, could he claim Thai residency for this purpose? I am looking at Line 9 of form W-8BEN.

[Oxx]

It's true that dividends are taxed at 30% and there is no getting away from that.

I presume we're talking about dividends on US stock here, in which case there is getting away from the 30% tax. If you hold the stock in, say, Luxembourg, there's a tax treaty between Luxembourg and the US that means that US dividends are only taxed at 15%. This can make Luxembourg a much more attractive location to hold US investments than Singapore. And, in my experience, brokerage and custody costs are also lower in Luxembourg.

you don't "hold" any U.S. assets in Luxembourg even if your bank is located there. these assets are held by individual U.S. custodians who are also payment agents. your bank is only the book keeper. and that applies to Singapore or any other country too.

moreover, the tax treaties are referring to residency of the beneficiary.

Maybe I'm misunderstanding you, but in terms of withholding tax on dividends in my experience it most certainly is not the residency of the beneficiary that applies. With Saxo in Singapore 30% was deducted from my US dividends, whilst with TD International in Luxembourg the deduction is only 15%. My residency is irrelevant. It's the location of the brokerage that counts.

[Thailand J]

Withholdings may vary from one broker to another but not your tax rate.

All the publications and forms from IRS has to be wrong if residency is irrelevant...

[Naam]

It's true that dividends are taxed at 30% and there is no getting away from that.

I presume we're talking about dividends on US stock here, in which case there is getting away from the 30% tax. If you hold the stock in, say, Luxembourg, there's a tax treaty between Luxembourg and the US that means that US dividends are only taxed at 15%. This can make Luxembourg a much more attractive location to hold US investments than Singapore. And, in my experience, brokerage and custody costs are also lower in Luxembourg.

you don't "hold" any U.S. assets in Luxembourg even if your bank is located there. these assets are held by individual U.S. custodians who are also payment agents. your bank is only the book keeper. and that applies to Singapore or any other country too.

moreover, the tax treaties are referring to residency of the beneficiary.

Maybe I'm misunderstanding you, but in terms of withholding tax on dividends in my experience it most certainly is not the residency of the beneficiary that applies. With Saxo in Singapore 30% was deducted from my US dividends, whilst with TD International in Luxembourg the deduction is only 15%. My residency is irrelevant. It's the location of the brokerage that counts.

no such thing like brokerage or bank that counts. period!

where do you live?

[Naam]

Withholdings may vary from one broker to another but not your tax rate.

All the publications and forms from IRS has to be wrong if residency is irrelevant...

[Naam]

It's true that dividends are taxed at 30% and there is no getting away from that.

I presume we're talking about dividends on US stock here, in which case there is getting away from the 30% tax. If you hold the stock in, say, Luxembourg, there's a tax treaty between Luxembourg and the US that means that US dividends are only taxed at 15%. This can make Luxembourg a much more attractive location to hold US investments than Singapore. And, in my experience, brokerage and custody costs are also lower in Luxembourg.

you don't "hold" any U.S. assets in Luxembourg even if your bank is located there. these assets are held by individual U.S. custodians who are also payment agents. your bank is only the book keeper. and that applies to Singapore or any other country too.

moreover, the tax treaties are referring to residency of the beneficiary.

For someone who is not a citizen of US nor Thailand, who is on a retirement extension visa, live in Thailand year round except a few days out every few months, could he claim Thai residency for this purpose? I am looking at Line 9 of form W-8BEN.

yes!

[Thailand J]

Thank you for answering my question. I have just looked at page 37 of pub 901:
https://www.irs.gov/pub/irs-pdf/p901.pdf,
Interest and dividends from US are taxes at 15% but social security is still 30% for Thai residents..and I think the tax starts from the first dollar with no deductibles allowed.
It's not difficult to claim 15% on the interest and dividends once you are Thai resident. Just fill in W-8BEN enter Thailand on line 9. I was confused when I came to line 10 but you can just ignore it according to the instructions.

[Naam]

Thank you for answering my question. I have just looked at page 37 of pub 901:

https://www.irs.gov/pub/irs-pdf/p901.pdf,

Interest and dividends from US are taxes at 15% but social security is still 30% for Thai residents..and I think the tax starts from the first dollar with no deductibles allowed.

It's not difficult to claim 15% on the interest and dividends once you are Thai resident. Just fill in W-8BEN enter Thailand on line 9. I was confused when I came to line 10 but you can just ignore it according to the instructions.

no social security taxes on income derived from investments in U.S. assets.

[Thailand J]

You are right . I was referring to the 30% tax on the monthly social security payment from the US to the non US citizens outside of US, Form 1042-S.

[Crisu]

For higher valued accounts (1M+ USD), the tax residency declaration will be required.

Self declaration or a official document from the tax authority?

[lkv]

Self declaration or a official document from the tax authority?

Self declaration. But the bank may ask for additional supporting documents, depending on how each bank decides to do their due dilligence. Here is what's being discussed. Again, it's at a consultation stage.

2016ITABill_Annex1.pdf

[Oxx]

I presume we're talking about dividends on US stock here, in which case there is getting away from the 30% tax. If you hold the stock in, say, Luxembourg, there's a tax treaty between Luxembourg and the US that means that US dividends are only taxed at 15%. This can make Luxembourg a much more attractive location to hold US investments than Singapore. And, in my experience, brokerage and custody costs are also lower in Luxembourg.

you don't "hold" any U.S. assets in Luxembourg even if your bank is located there. these assets are held by individual U.S. custodians who are also payment agents. your bank is only the book keeper. and that applies to Singapore or any other country too.

moreover, the tax treaties are referring to residency of the beneficiary.

Maybe I'm misunderstanding you, but in terms of withholding tax on dividends in my experience it most certainly is not the residency of the beneficiary that applies. With Saxo in Singapore 30% was deducted from my US dividends, whilst with TD International in Luxembourg the deduction is only 15%. My residency is irrelevant. It's the location of the brokerage that counts.

no such thing like brokerage or bank that counts. period!

where do you live?

OK. I think the explanation I got from my Saxo client liaison was wrong and I was misled. Thanks Naam for helping me clear that up. I think the issue is that some brokerages (such as Saxo) don't find it worth their while implementing the procedures for dealing with tax treaties and so just apply the standard 30% rate. (This also explains why they provide a link to a third party that will handle tax reclaims for a fee.) TD International (formerly Internaxx), however, does provide the necessary processing to reduce the withholding tax to 15% for residents of countries that have the appropriate treaty in place.

Since neither Hong Kong nor Singapore has in place the relevant treaty with the United States I suspect that brokerages there are unlikely to provide the reduced rate of withholding tax for Thai (and other) residents, whilst brokerages in countries with a treaty in place (such as Luxembourg) are more likely so to do.

Anyway, this is something one should definitely check out before opening a brokerage account if expecting US dividend income.

[Naam]

I think the issue is that some brokerages (such as Saxo) don't find it worth their while implementing the procedures for dealing with tax treaties and so just apply the standard 30% rate.

but it's not some difficult administrative procedure to reduce the tax liability from 30 to 15% plus it's only necessary every two years assuming a relevant tax treaty with the country of residence exists.

[SheungWan]

When considering where to park one's assets as an expat, IMHO both HK and Singapore are both good so I don't think there is a right or wrong choice. What I would take into consideration are other non-financial factors. It is likely that one is going to make an occasional visit to one's base. Singapore's advantage is that it is closer and therefore any flight is going to be shorter. Hong Kong's advantage is that it is an eminently more interesting place than Singapore and therefore more of a joy to visit than Singapore. At least that is how it has worked out for me. Good luck.

[Oxx]

I think the issue is that some brokerages (such as Saxo) don't find it worth their while implementing the procedures for dealing with tax treaties and so just apply the standard 30% rate.

but it's not some difficult administrative procedure to reduce the tax liability from 30 to 15% plus it's only necessary every two years assuming a relevant tax treaty with the country of residence exists.

I don't know anything about what's involved in implementing the lower rates or how difficult it is. Clearly Saxo in Singapore considers it non-trivial. I was wondering, though, whether anyone has brokerage accounts in Hong Kong or Singapore where the 15% withholding rate is available for Thai (or similar) residents for US dividend income. Is Saxo Singapore atypical, or is it the norm?

[Naam]

I think the issue is that some brokerages (such as Saxo) don't find it worth their while implementing the procedures for dealing with tax treaties and so just apply the standard 30% rate.

but it's not some difficult administrative procedure to reduce the tax liability from 30 to 15% plus it's only necessary every two years assuming a relevant tax treaty with the country of residence exists.

I don't know anything about what's involved in implementing the lower rates or how difficult it is. Clearly Saxo in Singapore considers it non-trivial. I was wondering, though, whether anyone has brokerage accounts in Hong Kong or Singapore where the 15% withholding rate is available for Thai (or similar) residents for US dividend income. Is Saxo Singapore atypical, or is it the norm?

now you are mixing up things Oxx. the withholding tax on dividends (and a small percentage of corporate bonds) is a U.S. tax, not at all pertaining to bank or broker location.

U.S. Tax Withholding on Payments to Foreign Persons

Most types of U.S. source income paid to a foreign person are subject to a withholding tax of 30%, although a reduced rate or exemption may apply if stipulated in the applicable tax treaty.

For more details on the rules for proper withholding and information reporting of U.S. source income paid to foreign persons, refer to NRA Withholding.

https://www.irs.gov/Businesses/U.S.-Tax-Withholding-on-Payments-to-Foreign-Persons

[Oxx]

now you are mixing up things Oxx. the withholding tax on dividends (and a small percentage of corporate bonds) is a U.S. tax, not at all pertaining to bank or broker location.

I don't think I am (now that you've clarified things for me). I'm now interested in how tax treaties are applied by brokers in different jurisdictions.

As previously stated, my experience is that my Singapore broker, Saxo, withholds at 30% (i.e. ignoring the Thai-US tax treaty), whilst my Luxembourg broker, TD International, withholds at 15% (i.e. applying the treaty).

So, is Saxo an exception - do most brokers in Singapore and Hong Kong apply the lower rate for Thai residents or not?

[Naam]

now you are mixing up things Oxx. the withholding tax on dividends (and a small percentage of corporate bonds) is a U.S. tax, not at all pertaining to bank or broker location.

I don't think I am (now that you've clarified things for me). I'm now interested in how tax treaties are applied by brokers in different jurisdictions.

As previously stated, my experience is that my Singapore broker, Saxo, withholds at 30% (i.e. ignoring the Thai-US tax treaty), whilst my Luxembourg broker, TD International, withholds at 15% (i.e. applying the treaty).

So, is Saxo an exception - do most brokers in Singapore and Hong Kong apply the lower rate for Thai residents or not?

there's one thing very specific as far as Singapore financial institutions are concerned. they are under big pressure by the "regulator" MAS (Monetary Authority of Singapore) not only to do the "right thing" but also assume responsibility and accept fines when not. that pressure and fear extends to the power of the almighty GNoE (Greatest Nation on Earth™) and potential sanctions.

that's why they dodge (if possible) any responsibility, e.g. deducting withholding tax or not based on the client's submitted evidence (proof of residence). it is rather easy to obtain documentation "proving Thai residence" without spending more than a few days (extension of stay) in Thailand per year.

i assume Saxo refuses to take the responsibility whether to deduct the full 30 or the reduced 15% because the IRS might hold them responsible in case it turns out that the residence was faked.

i can't answer your question although i am banking in Luxembourg since 35 and in Singapore since 16 years but a reduced rate does not apply because my accounts / portfolios are in the name of a corporation which is not established in a jurisdiction that has ratified a tax treaty with the US.

[Crisu]

Self declaration or a official document from the tax authority?

Self declaration. But the bank may ask for additional supporting documents, depending on how each bank decides to do their due dilligence. Here is what's being discussed. Again, it's at a consultation stage.

Thank you for this info. very interesting. i have already a sg account with a registered residence in thailand.

in the above document i read at pre-existing individual accounts:

"When one or more indicia are discovered, the SGFI must treat the account as a reportable

account unless the SGFI elects to apply curing procedures such as obtaining a self-certification from the account holder or documentary evidence to establish the account

holder’s tax residence."

which indicia they are talking about?

at account opening the residence will normally be determined already with corrresponding documents/declarations.

[lkv]

Self declaration or a official document from the tax authority?

Self declaration. But the bank may ask for additional supporting documents, depending on how each bank decides to do their due dilligence. Here is what's being discussed. Again, it's at a consultation stage.

Thank you for this info. very interesting. i have already a sg account with a registered residence in thailand.

in the above document i read at pre-existing individual accounts:

"When one or more indicia are discovered, the SGFI must treat the account as a reportable

account unless the SGFI elects to apply curing procedures such as obtaining a self-certification from the account holder or documentary evidence to establish the account

holders tax residence."

which indicia they are talking about?

at account opening the residence will normally be determined already with corrresponding documents/declarations.

Again, we should not make too many assumptions at this stage. It seems the Singapore government is interested to have a wider approach ( ie have the banks send all the non resident info to them). That is as far as I understand not set in stone, they could very well go for the minimal CRS approach. They also said they will not collaborate with countries that do not have "a strong rule of law". They could focus primarily on UK and France. Then, the AEOI is not multilateral, it's bilateral, so another document will have to be signed with each country that the automatic exchange takes place (a competent authority agreement).

So it's really all up in the air still.

But to answer your question, friendlier banks may understand "tax residence" as simply the address currently in the system and not ask for any further information. Conflicting indicia may mean a phone number in another country, two addresses in the system (one belonging to a reportable jurisdiction, etc), where they may ask the client for the self certification. That may be sufficient for some banks, it may not for others. We will see.

http://www.mof.gov.sg/Public-Consultation/Public-Consultation-Open/Public-Consultation-on-Draft-Income-Tax-Amendment-No-2-Bill-2016

[Crisu]

Self declaration or a official document from the tax authority?

Self declaration. But the bank may ask for additional supporting documents, depending on how each bank decides to do their due dilligence. Here is what's being discussed. Again, it's at a consultation stage.

Thank you for this info. very interesting. i have already a sg account with a registered residence in thailand.

in the above document i read at pre-existing individual accounts:

"When one or more indicia are discovered, the SGFI must treat the account as a reportable

account unless the SGFI elects to apply curing procedures such as obtaining a self-certification from the account holder or documentary evidence to establish the account

holders tax residence."

which indicia they are talking about?

at account opening the residence will normally be determined already with corrresponding documents/declarations.

Again, we should not make too many assumptions at this stage. It seems the Singapore government is interested to have a wider approach ( ie have the banks send all the non resident info to them). That is as far as I understand not set in stone, they could very well go for the minimal CRS approach. They also said they will not collaborate with countries that do not have "a strong rule of law". They could focus primarily on UK and France. Then, the AEOI is not multilateral, it's bilateral, so another document will have to be signed with each country that the automatic exchange takes place (a competent authority agreement).

So it's really all up in the air still.

But to answer your question, friendlier banks may understand "tax residence" as simply the address currently in the system and not ask for any further information. Conflicting indicia may mean a phone number in another country, two addresses in the system (one belonging to a reportable jurisdiction, etc), where they may ask the client for the self certification. That may be sufficient for some banks, it may not for others. We will see.

http://www.mof.gov.sg/Public-Consultation/Public-Consultation-Open/Public-Consultation-on-Draft-Income-Tax-Amendment-No-2-Bill-2016

well, i am not so much concerned about the aeoi but more abut the possibility that sg banks are requested to ask for a tax no. or declaration from the tax authority of the residence country for existing sg accounts even if the residence country (e.g. thailand) is not participating the aeoi and maybe never will.

up to now, it was easy to prove thailand tax residence. one utility bill for water, tv ect. thats it. maybe also a written self-declaration.

if sg is going to ask for a thai tax no. or even a written declaration from thai tax authority, which you not have right now, then this would be longer process to obtain and may need to be started now.

perhaps it is even impossible to submit such a tax no. because you are no paying any tax in thailand right now, making the contry interesting for expats.

[lkv]

well, i am not so much concerned about the aeoi but more abut the possibility that sg banks are requested to ask for a tax no. or declaration from the tax authority of the residence country for existing sg accounts even if the residence country (e.g. thailand) is not participating the aeoi and maybe never will.

up to now, it was easy to prove thailand tax residence. one utility bill for water, tv ect. thats it. maybe also a written self-declaration.

if sg is going to ask for a thai tax no. or even a written declaration from thai tax authority, which you not have right now, then this would be longer process to obtain and may need to be started now.

perhaps it is even impossible to submit such a tax no. because you are no paying any tax in thailand right now, making the contry interesting for expats.

"We will provide further details on the implementation details in the Regulations. MOF, IRAS and the Monetary Authority of Singapore (MAS) will be introducing draft Regulations for public consultation by mid-2016. The Regulations will include the list of Non-Reporting Financial Institutions and Excluded Accounts, due diligence and reporting requirements to implement the CRS."

http://www.mof.gov.sg/news-reader/articleid/1630/parentid/59/year/2016?category=Press%20Release

[lkv]

I have made some incorrect statements in previous posts. I stated that the wider approach means all SG banks collect all non resident info and pass it to the SG goverment.

Sorry about that.

Wider approach means Financial Institutions will determine all non resident accounts tax residency status, but they will only pass to Government institutions the information relating to jurisdictons that SG specifically signed a CAA with.

No CAA is signed at present, and the chances of them being signed are limited. I think they may eventually sign a couple (perhaps UK and France), to appear like they are indeed a cooperating jurisdiction.

That way, if anybody is accusing them of being a non cooperating jurisdiction, they can always say: Hey listen, we participate in the AEOI, but we will only sign the CAA with countries with a strong rule of law, and only if the other financial centers sign them (Hk, Dubai).

This is like: "we are part of the AEOI but we don't share info with anyone"

Go figure

I believe that once they make clear the Regulations about what due dilligence Financial Institutions have to do, most banks will not want to do any more than the minimum necessary. Whether or not that requires a TIN remains to be seen. If they become too fussy (unlikely), there is always Hong Kong.

Hong Kong has made quite clear their intention to require TIN's only from reporting jurisdictions. Thailand is not one of them. Also they expressed their intention to use a pragmatic approach ie banks have to collect on retain information only on accounts from reporting jurisdictions, not all non resident accounts like SG.