US brokers: Taxation of dividends & interest for foreign corporations

M

makloda

I understand _ALL_ foreign natural persons as well as foreign corporations are affected by US withholding taxes on dividends and interest. The question is: Can we get the taxes "back" somehow?

Let's say I have an account with a US broker and use my Bahamas corporation which owns a bunch of US dividend stocks. These pay dividends every quarter, the broker keeps x% withholding tax and remits it to the US IRS.

Is there any way to ever recover these (lost) funds? Is there any legal way around this type of taxation?

I used the search here on the forum and couldn't find any answers to this issue. Thanks in advance.
 
Fill out a W8-BEN form and submit it to your broker. This says you are not a US citzen and are exempt from the dividend and interest income withholding tax. Available from the IRS or your broker.
 
Quote from lescor:

Fill out a W8-BEN form and submit it to your broker. This says you are not a US citzen and are exempt from the dividend and interest income withholding tax. Available from the IRS or your broker.
More...

Actually nor true for most brokers.

IB Canada withholds 15% on ALL US dividend income for ALL accounts...
(I have several very different accounts)...
IF one fills out one of 3 different W8 forms...
And withholds 30% if you DO NOT.

You cannot ever, ever get the withheld funds back...
But Revenue Canada will give you a dollar for dollar tax credit for money withheld by the US government...
So ** if you pay taxes ** it's a complete wash.

This is possible ONLY because Canada has a tax treaty with the US.

If you country does not...
You will get the full US withholding treatment in the 30% range.

Why does the IRS do this?

This is the only way to prevent US citizens...
From opening foreign brokerge accounts as a ** tax evasion strategy **.
 
HoundDogOne thanks for the post. And let me guess, it doesn't make a different if the account is held by a non-US natural person or a non US-corporation!?

Sucks to lose out so much on the dividend income!
 
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