*Stock trading: countries: UK, France, Poland, Belgium, Portugal, Netherlands, Germany, Italy, Luxembourg
What is the withholding tax?
A withholding tax is a type of tax in which a percentage of payments made to individuals or entities is deducted. This is withheld at the source of income by the payer and sent directly to the tax authorities on the recipient's behalf. In addition to lowering the risk of noncompliance and underreporting of income, putting the burden of withholding tax on payers allows tax authorities to collect taxes in a timely and efficient manner. Withholding tax is a common practice in many financial transactions, including cash dividends from stocks.
In the context of Shares, we provide a diverse range of US and EU stocks to our users, and dividends paid out by shares from both US and EU companies are subject to withholding tax. Some of our members also have access to trading ETFs in our app, which might also be subject to the withholding tax.
*Keep in mind that the availability of different assets in the app differs according to the country you are registered from. Check out which assets are available in your country here: Countries currently supported.
Dividends from US companies
The US government imposes a withholding tax on dividends paid by US companies to non-US citizens or residents. Because Shares do not currently onboard US citizens or residents, all of our users are subject to this withholding tax. The withholding tax rate varies by country and is solely determined by the tax treaty your country has with the US.
Dividends from EU companies
Dividends paid out by EU companies are also subject to withholding tax. However, the withholding tax rate is determined by several factors, including:
- Government taxation: The rate is set by the government of the country in which the company is based.
- Residency: Your residency status can also affect the withholding tax rate; for example, some EU countries apply the same tax rate to country residents and non-residents, while others have different tax rates for country residents and non-residents.
Withholding tax rates can differ due to the diverse nature of EU member countries and their respective tax policies. This means that the rate imposed on dividends paid by EU companies is determined by the country's specific tax regulations.
Tax rate and calculation at Shares
The withholding tax will be deducted from your dividend payout. You will be able to check the exact amount that has been deducted from your dividend payout as a part of the withholding tax in the application. To check the details of your dividend payout,
Navigate to your profile menu and tap on “Activity”.
On the "Activity" screen, tap on the particular dividend payout you wish to check. In this page you will find the details of the dividend payout which will include Dividend per share, Applicable shares, Withholding tax, and Total credit.
In Shares we do not provide tax advice, If you would like to know more in detail about your tax implications, we recommend you to consult with a professional tax advisor.