Why should you be concern about withholding tax as a dividend income investor?
As a foreigner investing in other countries stock exchanges, unless your country has a tax treaty with that country, there is usually a tax on the dividend income or income in general.
The question is how much.
In this past article I explained my experiment to see how much withholding tax is levied on my Telefonica dividend purchase. The conclusion is that:
If you as an international investor invest in a international ADR listed both on the US stock exchange (as an ADR) and on its own stock exchange and you purchase the ADR, only the home country’s withholding tax is levied and not an additional 30% withholding tax.
A list of countries’ withholding tax rates
Here is a list of countries’ with withholding taxes updated to 2015:
Do note that tax policy is subject to change and it is one area that for passive dividend income investors we need to contend with.
Also that this list is against US residents so for international investors it should be used as a guidepost.
What I recommend is to evaluate which is the more tax friendly international countries and then do a screen of good stocks there.
Then do a google up their latest withholding tax policy.
I run a free Singapore Dividend Stock Tracker available for everyone’s perusal. It contains Singapore’s top dividend stocks both blue chip and high yield stock that are great for high yield investing. Do follow my Dividend Stock Tracker which is updated nightly here.
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