DWT FAQs

Each country is free to set their withholding tax rate as they see fit. Country rates range between 35% (Switzerland) to 15% (the Netherlands).

If you own shares in a Swiss company, let's call it SwissCo AG, which pays a dividend of €1,000 (after converting CHF to €), only €650 will be paid into your account as the Swiss will deduct 35% DWT when the dividend is paid.

The amount you can reclaim depends on whether you are an individual, a company, a pension fund etc, where you are resident and how much of the dividend-paying company you own. As a general rule, individuals should only bear withholding tax at 15% so in the case of the Swiss dividend in the example above you could reclaim €200.

Countries regularly enter into bilateral agreements called double tax treaties. The point of these treaties is to avoid double taxation of taxpayers by restricting and assigning taxation rights between the two countries. Most modern treaties are based on something called the OECD model treaty which has a specific article devoted to how dividends are taxed. As a result, most treaties specify a rate of 15% for individuals holding less than 10% of the dividend paying company. Other rates apply in the case of shareholders with greater than 10%. As the default rate withheld by most countries is in excess of the treaty rate, the difference is reclaimable.

This system is called relief at source (RAS). Some countries such as the US and Ireland do operate such systems however most countries do not have such a facility in place. As a result, reclaims are required. Even for those countries operating relief at source it is still necessary to have the suitable documentation in place to allow the dividend payer to verify your country of residence so they can confirm you are entitled to treaty benefits and so they can apply the appropriate rate. The US, for example, requires a W8-Ben to be completed and submitted to the payer. If such documentation is not in place when the dividend is paid, the default rate must be applied and a reclaim submitted.

The European Commission has recently issued a recommendation to EU member states to organize a harmonized reclaim system and implement a RAS system. No date has been confirmed and this only covers EU countries. Other jurisdictions will introduce RAS as and when they see fit.

Like everything in the world of tax, as the taxpayer, you can do the reclaim yourself. What you may find, however, is that trawling through double tax treaties and working out the requirements for each particular system is not a good use of your time. Why not let taxback.com do the work for you for a small contingency fee.

The length of time your refund takes is entirely dependent on the tax offices involved as they all have differing timelines. Our dividend withholding tax specialists can advise of the timelines relevant to your particular claim(s).

Reclaims can be made for between 2 - 6 years depending on the jurisdiction that the dividend was paid from so if you've never filed a reclaim the amount at stake could be substantial.

If you use our fast and efficient service, all you will need to do is register with us. We will send you a short taxpack with a few questions. You'll need to sign a form of authority to allow us to deal with the various tax offices and you'll need to send us the dividend vouchers which the tax offices require to support the claim. After that you just need to wait for the refund to arrive. You can stay up to date through your own unique TaxTracker (®) account and if you have any questions you can speak with or email your account manager who will be available to assist.

When you are paid a dividend as a shareholder the company is required to send you a dividend voucher showing (broadly):

• The payment date
• The number of shares held
• The dividend per share
• The gross dividend
• The withholding tax applied.

Foreign tax offices require this voucher as proof that you incurred withholding tax.

Register here to get a call back from one of our team.