# Withholding tax treaties by country?



## Justin1980 (Feb 23, 2013)

Please forgive me if im having trouble explaining my question. 

So as i understand, Canada and America have a treaty wherein, if a Canadian resident holds shares of an American company within their RRSP account, they can avoid the 15% withholding tax on dividends paid to them - usually held by the American IRS.

Im interested in companies based in other developing countries, such as India, China, Brazil etc. However, before doing so, I would like to know how I may be subjected to taxation on dividends etc. But of course, the treaty between Canada and other countries varies, and might also be similarly taxed at various levels depending on if said shares are held in our Margin, TFSA, or RRSP accounts etc.

Does anyone know where we can go for these answers?

I found a site through the U of BC that listed PDFs of all the treaties, but each countries is 30+ pages, and VERY difficult to understand, for myself at least.

Thank you in advance.


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## HaroldCrump (Jun 10, 2009)

I have often used this KPMG article as reference:

http://www.kpmg.com/Ca/en/IssuesAnd...holding-tax-rates-for-treaty-countries-v2.pdf


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## humble_pie (Jun 7, 2009)

here's a tiny interesting factoid.

a few countries do not impose withholding tax on dividends when these are paid to non-residents. Most of these countries are so small that they don't really host the kind of large multinational corporation that we canadians might feel comfortable owning when we venture to invest abroad.

however, 2 of these countries - great britain & hong kong - are indeed big. They host companies whose names are pretty near household words. Dividends from shares of british companies such as vodaphone or hong kong companies such as china mobile do not have any withholding tax imposed at source.

i don't own any such shares myself. If one were interested, one would normally purchase such shares as ADRs in new york.


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## MrMatt (Dec 21, 2011)

humble_pie said:


> here's a tiny interesting factoid.
> 
> a few countries do not impose withholding tax on dividends when these are paid to non-residents. Most of these countries are so small that they don't really host the kind of large multinational corporation that we canadians might feel comfortable owning when we venture to invest abroad.
> 
> ...


Your statement on Hong Kong conflicts with the posted link from KPMG, do you have a link to the treaty or other resource?


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## Justin1980 (Feb 23, 2013)

MrMatt said:


> Your statement on Hong Kong conflicts with the posted link from KPMG, do you have a link to the treaty or other resource?


Now correct me if im wrong, but, does the link provided not provide info only for the residents of OTHER countries?

See note 1 on page 5
"The actual treaty should be consulted to determine if specific conditions, exemptions or
tax-sparing provisions apply for each type of payment. The rates indicated in the table apply
to *payments from Canada to the treaty country*; in some cases, a treaty may provide for a
different rate of withholding tax on payments from the other country to Canada."

Thus, these wouldn't be the numbers applicable to us?


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## humble_pie (Jun 7, 2009)

Justin1980 said:


> Now correct me if im wrong, but, does the link provided not provide info only for the residents of OTHER countries?
> 
> See note 1 on page 5
> "The actual treaty should be consulted to determine if specific conditions, exemptions or
> ...




yes, you're absolutely right. 

this KPMG document recently surfaced in a nearby thread about NR withholding tax that might apply to canadian investment income that would be paid to a resident of germany & the same confusion prevailed. Problem is that the title of the list is ambiguous, so at first glance it can be interpreted either way. The KPMG editors should have made the nature of the list 100% clear in the title or sub-title.

justin what u wish to have is a list of what other countries withhold in the way of NR (non-resident) tax to canadians, is that not so?

alas the KPMG list shows what canada withholds from various types of canadian investment income that gets paid to residents of other countries.

there is a full discussion of this in a recent tax-in-germany thread. A UK national confirmed to that discussion that the UK rates shown in the KPMG list are correct for what canada withholds for UK residents, not the reverse.

with respect to Hong Kong, this list shows what canada withholds as NR tax to hong kong residents. Upthread i've posted my belief that, in a reverse scenario, hong kong withholds nothing to canadian residents.

(aside to justin) i've not heard of any list that shows NR rates imposed by other countries according to their various tax conventions with canada. Bravo to you for finding the basic list of countries & even beginning to study the different treaties! it must be daunting work!

here's a suggestion ottomh: the countries you mention you are interested in - brazil, india, china - all have important publicly-held corporations with ADRs or ADSs that trade in new york. The merchant-administrators of these ADRs are 2 or 3 giant new york city banks. Perhaps you could identify one or 2 of these big ADRs - infosys from india, say, or a Tata metals company from india - then examine its NYC administrative bank website to find out about NR tax as it applies to that specific ADR.

if the website fails to enlighten, then move on to contacting the bank in person by email or phone. The NR tax rules will be standard for each country (keep in mind that NR rates for ADRs traded in the US will be standard according to the country/USA tax convention, not the country/canada tax convention) so once you've sweated em up for one or 2 ADR companies in a single country, you'll know for all in that country.


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## mrPPincer (Nov 21, 2011)

I was looking into this some months ago, and unfortunately it looks like another case where it seems there's a free lunch but there usually isn't.

With British ADRs for example, no, there is no foreign withholding tax, but they have a system of dividend imputation, where locals get reimbursed, and we foreigners do not.
http://en.wikipedia.org/wiki/Dividend_imputation

At the point of time I was looking into this Canada and the UK were working on a new agreement, so details may have changed since then.


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## liquidfinance (Jan 28, 2011)

mrPPincer said:


> I was looking into this some months ago, and unfortunately it looks like another case where it seems there's a free lunch but there usually isn't.
> 
> With British ADRs for example, no, there is no foreign withholding tax, but they have a system of dividend imputation, where locals get reimbursed, and we foreigners do not.
> http://en.wikipedia.org/wiki/Dividend_imputation
> ...


Locals do not get anything!

It reduces tax payable slightly for higher rate tax payers but for the typical Brit it makes no difference if you hold in a tax sheltered or taxable account. If VOD, for example, pays 10p a share then 10p is what you get. No tax payable and no refund to claim. Unless you are a top rate tax payer in which case you have 32.5% tax to pay.


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## Justin1980 (Feb 23, 2013)

humble_pie said:


> yes, you're absolutely right.
> 
> this KPMG document recently surfaced in a nearby thread about NR withholding tax that might apply to canadian investment income that would be paid to a resident of germany & the same confusion prevailed. Problem is that the title of the list is ambiguous, so at first glance it can be interpreted either way. The KPMG editors should have made the nature of the list 100% clear in the title or sub-title.
> 
> ...


Thanks Humble and Pincer.

Humble: after reading those last few lines of yours, I think I might be in a bit over my head. There's a lot i need to learn still, but that's ok. 

You are correct Sir, then. As a Canadian, im really not concerned with the info posted on the above site, as it lists the tax withheld by Canadian companies, on shares held by non-Canadians.

I basically need the exact opposite. And prefferably any "special agreements" like the "No withholding taxes on US shares held in Canadian Resident RRSPs" etc.

What i have found that seems to have the information desired seems to all be found here: http://faculty.law.ubc.ca/brooks/treaties/canada.html

But unfortunately, after trying to read just one of those, i soon realized they were beyond the scope of me being able to summarize them in the least! :S


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## mrPPincer (Nov 21, 2011)

liquidfinance said:


> Locals do not get anything!


They get a non-refundable tax credit, right?
If as you say the average Brit gets nothing, the high net worth Brit does get paid (lowered taxes), so the gov't is taxing the divies, just only on the backs of regular investors and foreigners.


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## liquidfinance (Jan 28, 2011)

From a tax advantaged point of view it's as much of a free lunch as a Canadian can expect to get. 

Lowered taxes yes slightly if you pay the higher rate level of tax to HMRC. 
From my perspective it makes much more sense to move my UK holdings which have ADR's into my TFSA. The only advantage of me holding in the UK is the native currency. 

Hold in the UK I pay marginal rate to CRA on the Divi. hold ADR in TFSA I pay nothing.


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## mrPPincer (Nov 21, 2011)

I see, when I was looking into the ADRs though this dividend imputation thing didn't look much different than a dividend withholding tax, except hidden behind the scenes.


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## humble_pie (Jun 7, 2009)

Justin1980 said:


> But unfortunately, after trying to read just one of those, i soon realized they were beyond the scope of me being able to summarize them in the least! :S



yes, you are definitely onto something!

here's what i happen to believe: having a comprehensive, masterful, planetary overview of which countries are charging what kinds of NR taxes, duties, export stamps, whatevers on streams of money being despatched to other countries would normally be the bailiwick of an international accounting firm. Entire teams of their professionals would have access to their libraries. They charge accordingly.

but the likes of us retail investors don't need anything like that. Far from it. IMHO the issue can be approached from the ground up, not from the top down.

first, get an idea of a foreign company or 2 that you'd like to own. Then see if these trade as ADRs in new york (they usually do.) Owning the ADR will likely be the easiest - in some cases the only - way to own a share interest in said company (for example india does not allow foreigners to invest directly in its stock markets) (it does permit giant international banks to do so) (that's another story).

then after that, after u find a few attractive overseas companies that have reasonably liquid ADR markets in the US of A, you can research what kind of foreign tax strings might be attached. In most cases, with an ADR, there's nothing that can be done about it anyhow.

if you might be interested in the economy of an entire country rather than a few companies within that country, then there are plenty of country-specific or region-specific etfs & index funds to choose from.

an ace rule is: US-dividends-are-taxed-in-canada-as-100%-ordinary-income-which-is-not-good-plus-there-is-US-withholding-tax-usually-15%-so-to-avoid-all-this-grief-keep-US-securities-in-rrsp-but-not-in-tfsa.


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## mrPPincer (Nov 21, 2011)

I'm glad I chimed in here, I'm rethinking British ADRs now..

edit.. post was in reference to liquidfinance's observations.. did not see humble_pie's post when I hit enter key..


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## Justin1980 (Feb 23, 2013)

Oi! Thanks fellas. YEs, US shares are all in my RRSP. Thanks for the input humble, i will go about it as you suggest.  An Etf may be right on the money for a taste of china etc.
Thanks again!


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## humble_pie (Jun 7, 2009)

it never hurts to take a peek at some of this stuff. Finance is tricky. There are lots of pitfalls.

chattering & joking about the wilder shores of foreign withholding tax actually does help in picking - at the end of the day - the plain, simple, straightforward thing to do. It makes it easier to rule out the chaff, the drek & the wrong turns.

usually plain & simple willl be the thing most likely to succeed, imho.


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## My Own Advisor (Sep 24, 2012)

Humble said it well, at least that's what I try and do....

1. Get an idea of a foreign company or 2 that you'd like to own. 
2. If these trade as ADRs in US stock market, buy it there.

Otherwise, might be best to own a good US-listed ETF that owns the foreign company or companies. The ace rule is one to remember: US-listed ETFs and US stocks go best in RRSP.


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## liquidfinance (Jan 28, 2011)

An interesting point is for people to be aware of situations like this. Maybe this is the only company it is applicable to. 

RDS.A and RDS.B

RDS.A is subject to Dutch withholding tax at 15% RDS.B is not subject to any withholding tax.


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## MrMatt (Dec 21, 2011)

Justin1980 said:


> Now correct me if im wrong, but, does the link provided not provide info only for the residents of OTHER countries?
> 
> See note 1 on page 5
> "The actual treaty should be consulted to determine if specific conditions, exemptions or
> ...


Yes, thanks for that, I guess I misread. Nice to know our gov gouges the foreign investors too!

Now what I'd like, being self centered, is the document that tells me what withholding taxes I have to pay, as an investor in Canada.


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## warp (Sep 4, 2010)

It's ridiculous how hard it is to find this seemingly simple information.

I called my broker last year and asked if they had a simple list of different countries and what withholding taxes there would be to a Canadian on dividends from these countries. I was told that they had no such list, and didn't know of anywhere where I might get this info, which seems silly. Apart from reading the long, long,long, boring tax treaties of each country, there seems to be no place to get this simple info.

What I do now...if I am unsure of a certain stock from a certain country, is I phone my broker, and have him look up some investor unknown to me there, and check to see what % has been withheld form his last div payment on that particular stock, from that particular country. I also make sure they check where the div is going,,,,,,cash accounts and registered accounts, and TFSA accounts. 

Ridiculous, but the only way I have come up with to get this info. If anyone here knows a better simple way...please post !


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## humble_pie (Jun 7, 2009)

warp said:


> It's ridiculous how hard it is to find this seemingly simple information.
> 
> I called my broker last year and asked if they had a simple list of different countries and what withholding taxes there would be to a Canadian on dividends from these countries. I was told that they had no such list, and didn't know of anywhere where I might get this info, which seems silly. Apart from reading the long, long,long, boring tax treaties of each country, there seems to be no place to get this simple info.
> 
> ...



as a matter of fact this is an excellent way to find out what, exactly, is going on.

what the broker did when asked about a specific security: he cross-referenced through the security itself to another client who held it, then analyzed the dividend information to see what details were involved, plus he took note of what type of account it was; broker then accurately transmitted these info details back to warp.

beats poring over tax treaties by a mile. Another illustration of why working from the ground up is a strategic approach when assembling information about foreign investments.


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## Justin1980 (Feb 23, 2013)

Yeah, Warp that's a great idea, just would be nice to "scale it up," to obtain a "complete" list in a shorter time frame. I wonder if the following idea might be possible for use to get together some sort of listing?

1) Perhaps have an admin or Vet here contact a handful of the more popular financial blogging site owners, and explain what we're looking for and if they wouldn't mind mass emailing their email lists something along the lines of the following:

"Goodmorning readers, over at CMF.com we're trying to get a list of Withholding tax % treaties, by country, and by account type held in.
If you are a canadian resident holding shares in a foreign company and would be so kind as to let us know which company you own, from which country, in which account you hold it, and what your most recent % tax withheld was, this would be helpful for all blah blah."

.....I guess i only had a "1)" Lol......


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## Justin1980 (Feb 23, 2013)

myownadvisor.ca
dividendninja.com - Mark
Derek Foster @ milliondollarjourney.com or stopworkingnow.ca
moneysmartsblog.com
thepassiveincomeearner.com
http://moneyindex.org/
http://canadiancouchpotato.com/

...off the top of my head........


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## humble_pie (Jun 7, 2009)

liquidfinance said:


> From my perspective it makes much more sense to move my UK holdings which have ADR's into my TFSA.


liquid could i focus on this issue. Somewhere in this thread i posted that great britain & hong kong are rare among countries in that they do not withhold non-resident tax on dividends paid to offshore owners.

where i'd like to go with this: british companies that have ADRs trading in the US may be excellent choices for canadian TFSA investors who a) wish to hold some USD currency securities in the tax-free in order to diversify, but b) also wish to avoid the standard 15% US NR withholding tax on regular US dividends that will apply to tfsa accounts.

a number of months ago, i had a conversation with a person at Citibank, a US depositary bank in the ADR system. We spoke about US withholding tax on ADRs. She explained that, in cases where the host country of an ADR does not impose a withholding tax, then neither does the US. 

what this means is that zero-withholding-tax ADRs from great britain & hong kong could serve as USD holdings in a TFSA account without any penalties or foreign taxes being imposed.

liquidfinance might you be kind enough to offer a short list of british ADRs? if you would have comments about some of the candidates, that would be even better.


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## Justin1980 (Feb 23, 2013)

In regards to Hong Kong, i just found this:

Canada's First Tax Treaty with Hong Kong

The first tax treaty between Canada and the Hong Kong Special Administrative Region of the People's Republic of China was signed on November 11, 2012, but it has not yet come into force. A notable feature of the treaty is the reduction of withholding tax rates.

*Under the treaty, the withholding tax rate on dividends is 5 percent if the corporate beneficial owner controls, directly or indirectly, at least 10 percent of the voting power of the dividend payer (15 percent otherwise).* The withholding tax on interest and royalties is 10 percent. 

The new rates are particularly beneficial to Hong Kong residents who receive payments from Canada. The reduction in withholding taxes will be large; in the absence of a treaty, Canada applies a general 25 percent withholding tax rate on certain cross-border payments. On the other hand, Canadian residents will see little, if any, reduction of Hong Kong withholding taxes from the treaty. *Hong Kong has no withholding tax on interest and dividends*, although royalties are taxed at rates that range from 4.95 to 16.5 percent.

http://www.ctf.ca/ctfweb/en/newsletters/canadian_tax_focus/2013/1/130113.aspx

Is it safe to assume from this that for Canadians invested in Hong kong, that we'd see no withholding tax on interest or dividends, and royalties taxed at 10%?


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## liquidfinance (Jan 28, 2011)

This is what I have found in relation to Hong Kong. 

http://www.deloitte.com/assets/Dcom...es/2013/dttl_tax_highlight_2013_Hong Kong.pdf



> Withholding tax:
> Dividends – There is no withholding tax on dividend distributions from a Hong Kong entity.
> Interest – There is no withholding tax on interest payments from a Hong Kong entity.


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## humble_pie (Jun 7, 2009)

Justin1980 said:


> In regards to Hong Kong, i just found this:
> 
> "...*Hong Kong has no withholding tax on interest and dividends*, although royalties are taxed at rates that range from 4.95 to 16.5 percent ..."
> 
> Is it safe to assume from this that for Canadians invested in Hong kong, that we'd see no withholding tax on interest or dividends, and royalties taxed at 10%?


there you have it. I take it you mean canadian residents who hold hong kong based securities? your source is saying no NR withholding on interest or dividends but royalties from 4.95-16.5 percent.

ps i hope you won't mind a suggestion, journos are taught to be hyper-observant about this rule: when quoting, a source must always be identified. Many thankx.


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## liquidfinance (Jan 28, 2011)

humble_pie said:


> liquid could i focus on this issue. Somewhere in this thread i posted that great britain & hong kong are rare among countries in that they do not withhold non-resident tax on dividends paid to offshore owners.
> 
> where i'd like to go with this: british companies that have ADRs trading in the US may be excellent choices for canadian TFSA investors who a) wish to hold some USD currency securities in the tax-free in order to diversify, but b) also wish to avoid the standard 15% US NR withholding tax on regular US dividends that will apply to tfsa accounts.
> 
> ...



Humble. 

Here is a comprehensive list of UK Companies which have ADR's available. Some are OTC markets. Not sure how these trade. I assume they should be as liquid as the underlying UK stock but haven't tested the theory yet.

http://topforeignstocks.com/foreign-adrs-list/the-full-list-of-british-adrs/

As for comments its hard to say. Most of the blue chips offer ADR's and have global exposure so you're not taking a pure play on the UK. Although others are of course UK concentrated. 

Some strong dividend candidates with a quick look down the list would be BT Group, Unilever, Astrazeneca, Diageo, Glaxosmithkline, HSBC, National Grid, Reed Elesevier, British American Tobacco, VOD. 

For some reason I can't see it on the list but B Sky B (BSYBY) Although OTC listed. Part of the Murdoch empire with a monopoly on satellite TV and heavily into home phone and broadband. 

For some reason there are companies missing on that list such as Shell (RDS.A and RDS.B)

It's a good start to fuel some research though. 

A good website I use to research the UK holdings is www.digitallook.com


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## humble_pie (Jun 7, 2009)

liquidfinance said:


> Humble.
> 
> Here is a comprehensive list of UK Companies which have ADR's available ... It's a good start to fuel some research



great! stuff!
i shall study up


(waving hand) hallooo CC!

(waving both hands) look over here CC! this is going to be a cornerstone strategy for building a globally diversified TFSA with no withholding taxes!

(jumping up & down) another big first from the little guys at cmf! dy-nah-mite!

(jumps onto nearby stone wall) hallooo CC! are u noticing that the british blokes are genius!

(hands fall) hallooo?

(silence) CC?


PS liquid there are so many more leading british candidates than i had expected. I imagine we could do the same thing with hong kong ADRs. Who knew?

PPS on 2nd thought maybe we should shut up about this on the forum & stick to pmms & develop our own TFSA oriented fund which we could sell to others?


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## mrPPincer (Nov 21, 2011)

liquidfinance said:


> Here is a comprehensive list of UK Companies which have ADR's available. Some are OTC markets. Not sure how these trade. I assume they should be as liquid as the underlying UK stock but haven't tested the theory yet.
> http://topforeignstocks.com/foreign-adrs-list/the-full-list-of-british-adrs/
> 
> For some reason there are companies missing on that list such as Shell (RDS.A and RDS.B)
> ...


Yeah that's definitely not the complete list if Royal Dutch Shell B is not there.

Also did not see the Ubisoft ADR there which is one that I have been following;
http://www.google.com/finance?chdnp...&q=OTCMKTS:UBSFY&ntsp=0&ei=xyVpUtDkN8W6qgGnPg

If I was a gambling man I'd have picked up a few shares of this one within the last week and sold it when it pops back up (or to hold for tech exposure).

But I'm not in buying mode right now and don't feel like doing a gambit or selling any of my US$ holdings to pick it up.

Happy hunting


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## Justin1980 (Feb 23, 2013)

humble_pie said:


> there you have it. I take it you mean canadian residents who hold hong kong based securities? your source is saying no NR withholding on interest or dividends but royalties from 4.95-16.5 percent.


Not that it matters really, but i THINK the royality tax for us MIGHT be 10% under the change, but im not positive.



> ps i hope you won't mind a suggestion, journos are taught to be hyper-observant about this rule: when quoting, a source must always be identified. Many thankx.


Oh no offense at all taken... Do you mean to mention the person who wrote it? Or the name of the journal? (as opposed to just the link i gave)?
And if so, do you mean for the benefit of those here, or for due recognition of the source?


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## warp (Sep 4, 2010)

There are all sorts of stupid rules when it come to foreign taxes on dividends and interest, ( as well as cap gains paid by ETF's).

If you buy UK stocks in New York,,there will be no taxes withheld on dividends....If you buy the UK ETF, alsom in newYork, That holds only UK stocks, many of which pay dividends to ETF...the US Govt will withhold 15% taxes, even though the UK does not want any. Pure theft....

If you buy US bonds individually, there will be no taxes withheld, as per US?CAN tax treaty...but if you buy a US Bond ETF, (such as JNK)...the US will withhold 15% taxes, even though the ETF pasy ONLY interest to its shareholders.

If a US ETF pays out any Capital Gains, during the year, the US will withold 15% taxes, even though Capital Gains are strictly exempt from US taxes in our Tax Traety with them.

I personally live through some this nonsense every year,,,and it drives me wild. I have called our Tax departmenst, and our finance departments, and many of the US ETF providrs in the US about all this...and have gotten no reasonable answer, except to say that the govt tells them what to do,,and they comply, not to be bothered by them.

As well keep in mind that US MLP's, and any other type of Limited Patnership, ( like Kinder Morgan, etc) , will withhold 30% taxes....same with US reits..30% witholding taxes.
However , if you buy a US MLP ETF, ( like AMJ, or AMLP), the withholding will only be 15%, even though all they hold are MLP's that pay US dividends. Same if you buy a US Reit ETF,,,15% withholding, even though all they hold are US reits that pay US divs!


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## Sampson (Apr 3, 2009)

@warp
Its not as non-sensical as you might think. If you hold the underlying security or bond directly, you can benefit from advantages negotiated in the tax treaty. If the fund company holds it and you buy into a bundled product, they hold it, distributions get taxed as if they hold it, and a ny treaty rules may or may not apply.


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## warp (Sep 4, 2010)

Sampson said:


> @warp
> Its not as non-sensical as you might think. If you hold the underlying security or bond directly, you can benefit from advantages negotiated in the tax treaty. If the fund company holds it and you buy into a bundled product, they hold it, distributions get taxed as if they hold it, and a ny treaty rules may or may not apply.


Sampson... thanks for the reply.

I already know all this....ETF's in the US are considered "Mutual Funds" under some old law there. 
The fund company/ETf may "hold" the securites /bonds.....but you, as the investor, actually own them by virtue of owning the fund.

This still does not make the system any less stupid...or unfair to investors.


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## Sampson (Apr 3, 2009)

warp said:


> I already know all this....ETF's in the US are considered "Mutual Funds" under some old law there.
> The fund company/ETf may "hold" the securites /bonds.....but you, as the investor, actually own them by virtue of owning the fund.
> 
> This still does not make the system any less stupid...or unfair to investors.


But the point is that you don't own the underlying security. You could not be issued a certificate no matter how much you want it.

How is this stupid. The owner, in the case of an ETF operated in the US, will be subject to taxation as a US corp. Just because a bunch of securities are bundled together and sold to foreigners, why should you receive tax treatment as if you were an American?


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## mrPPincer (Nov 21, 2011)

Sampson said:


> why should you receive tax treatment as if you were an American?


I think that's his point exactly; we should be taxed as if we were Canadians with a tax treaty in place, since the ETF is only a middleman bundling securities for us.

Of course our politicians have no time for this; they have much more important things on their minds since only maybe 1% of us know about the pitfalls they can focus on their eternal dog & pony show


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## Eclectic12 (Oct 20, 2010)

mrPPincer said:


> I think that's his point exactly; we should be taxed as if we were Canadians with a tax treaty in place, since the ETF is only a middleman bundling securities for us.
> 
> Of course our politicians have no time for this; they have much more important things on their minds since only maybe 1% of us know about the pitfalls they can focus on their eternal dog & pony show


I suspect Canada's politicians wouldn't be enough, even if they were interested. It would like take *both* Canada and US politicians, where I suspect they'd need a united front to deal with the likely opposition to complicating what is today a simple setup.

Today - the company or group that is forwarding the withholding taxes has it easy on two levels. To apply the taxes is knowing the home base of the purchaser and the inclusion rate is 100%.

To provide the tax treatment suggested would require tracking beyond the purchaser to the beneficial owner, including correctly applying the percentages. I suspect that just about everyone (i.e. companies, MFs, ETFs, REITs) would likely fight the added administration.


Cheers


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## Sampson (Apr 3, 2009)

But my point is we should not be taxed as a Canadian, or that the company directly holding the underlying security should not be expected to separateCanadian owners from American owners from Chinese or Indian owners.

The real issue is that these are complex products which you do not directly own.


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## mrPPincer (Nov 21, 2011)

It's not inconceivable that rules could be adjusted to allow those of us that have been dinged within registered accounts, or been hit with similar hidden taxes in various other ways, to at least write them off in some way.

I'm not suggesting that this is even remotely likely to happen.


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## mrPPincer (Nov 21, 2011)

btw all this hidden double even sometimes triple taxing, combined with the favourable tax treatment we get on canadian dividends has been a big factor towards me moving a much greater chunk of my equity back to here in Canada holding more individual canadian stocks that have significant foreign exposure or at least sector diversification to balance out an otherwise index portfolio.


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## Sampson (Apr 3, 2009)

I suppose I think of it similar to a sales tax, local or Federal you might pay when you go to a different country.

Should we pay those? Here we are buying a product from a foreign land, earning income from this foreign product. Some countries might incentivize us to invest or purchase their product, afterall, the ETF is simply a bundled product, not a direct holding.

Do we, or should we be entitled to some of the benefits of the treaties? possibly. Some of warps examples aren't even about getting shafted. the example of the MLPs is one where understanding how the investment vehicle is viewed by the host country, how taxes are taken first, then the ETF holder gets digned afterwards, lower amount.


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## humble_pie (Jun 7, 2009)

sampson don't u think we should move on to constructive talk? no use wasting time fretting over the stupids & the ridiculouses, the tax laws are what they are & we are not going to be able to change em.

upthread liquidfinance has produced a list of 45 - 45 no less - british companies with US ADRs & these have no withholding taxes whatsoever. 

i've been going through em a bit & have not found any i care for yet ... however i look for strong options markets on the ADRs as well, which makes the picking even more selective. 

faintly, RIO might be a possible candidate for me at some point in time. I just hadn't realized, until this thread, that its dividends & distributions would arrive without foreign tax. Of course, trades on its US options would be taxed at the usual favourable 50% rate 

if anyone would have a list of hong kong ADRs that trade stateside, i do believe we'd be pleasantly surprised by another fairly large group of well-known companies, all of whose ADRs trade without foreign withholding tax. ottomh i can only think of china mobile & a couple property companies.


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## Sampson (Apr 3, 2009)

Fair enough Pie,you know how it is sometimes, discussions wander off into the obscure.

My experience with foreign ADRs.

No tax - Brazil, both in registered and non-registered accounts.
WH tax - China (ETF from US); Direct holdings: Switzerland, France (in registered and NR accounts); 

@OP, Of BRIC companies held via ADRs, as I understand, Brazil moght be the only country that does not WH non-resident taxes.


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## Justin1980 (Feb 23, 2013)

Hey Sampson,
So you've held Brazilian shares and had no WH tax?
I've been in discussion with questrade, and this was his reply...which i believe suggests Brazil would withhold tax...?

"Yes so most dividends held in a RRSP account are exempt from any with-holding taxes. However when with-holding taxes do apply, that is when the chart becomes useful. Using your example with the country, Brazil, if you receive $100 in dividends, $25 will be with-held so your accounts gets credited $75.00. "


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## dynamicdiva (Sep 23, 2011)

*NR withholding tax Banco Santander ADR held within RRSP*

Anyone else hold Banco Santander within their RRSP? 

My quarterly dividend payout notes non-resident withholding tax withheld. Wondering if there is any way to recover this money or avoid paying it?


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## warp (Sep 4, 2010)

dynamicdiva said:


> Anyone else hold Banco Santander within their RRSP?
> 
> My quarterly dividend payout notes non-resident withholding tax withheld. Wondering if there is any way to recover this money or avoid paying it?


Banco Santander, which i have considered buying for years, but never did, is a Spanish company.
As far as I know, ( but please don't hold me to this), Spain will withhold 19.5 % taxes on divs paid even in a registered account.
There is no way , as far as I know to recover this tax.

The same holds true if you hold Telefonica.

Here is a quote from HUMBLE in his recent post:
" liquidfinance has produced a list of 45 - 45 no less - british companies with US ADRs & these have no withholding taxes whatsoever. "

What we are discussing on this thread is how stupid and unfair these withholding taxes can be. In Humbles example, it is true that there are no withholding taxes on British ADR's, and I hold sveral of them, and am looking to buy more, because there is no withholding taxes on dividends.
However, and this is where it gets dumb and unfair.....if I , or you, were to buy a US ETF that holds ONLY British dividend paying companies, the US would withhold 15% taxes on dividends paid, even though the British government doesn't want any, and keep that money! This is just theft!
The point here is for example only, as at this time, there is no ETF that holds only British div payers, although you can buy a British all stock ETF, where you would get dinged on any divs paid to you.

All the discussion on this thread judt shows how complicated , dumb, and unfair all these tax laws are. 
I won't hold my breath waiting for any govt to fix this mess....they are much miore concerned about collecting as much "revenue" as they can..( and then proceed to blow it on stupid schemes)


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## Toronto.gal (Jan 8, 2010)

^ Spain's withholding tax increased in 2012 from 19% to 21%. It was supposed to be a temporary increase, but AFAIK, it will remain same in 2014.

I DRIP SAN shares since the option was offered [withholding tax does not apply under this scenario, which more accurately, is called a Scrip Dividend Scheme].


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