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Dividends tax on shares

  • 27-09-2017 3:19pm
    #1
    Registered Users Posts: 4,639 ✭✭✭ CIP4


    I have only recently started into Investing and buying shares using degiro at the minute I only have a small amount of shares some on LSE and some on ISE. The Irish ones I got a small dividends couple of euros and degiro took 20% tax as they should.

    However how does it work from here struggling to get relevant info on dividends. I know with selling shares and capital gains tax if its less than 1270 euro per year profit you don't need to declare it is there something like this for dividends or am I suppose to declare them at the end of the year on PAYE anytime no matter how small the amount or the fact I have already paid 20% on them is that ok and the tax is paid what rate is dividends taxed at ? Also is it the same taxation rule for dividends on Irish shares vs. English ?

    I am a PAYE worker on the 40% tax band if that makes a difference. I know its not a big thing at the moment with small dividends amounts but I might as well do it right from the start to avoid issues when I have more shares and larger dividends payouts down the road. Thanks.


Comments

  • Posts: 17,733 ✭✭✭✭ [Deleted User]


    CIP4 wrote: »
    ............. I know with selling shares and capital gains tax if its less than 1270 euro per year profit you don't need to declare it is there something like this for dividends or am I suppose to declare them at the end of the year on PAYE anytime no matter how small the amount or the fact I have already paid 20% on them is that ok and the tax is paid what rate is dividends taxed at ? Also is it the same taxation rule for dividends on Irish shares vs. English ?

    I am a PAYE worker on the 40% tax band if that makes a difference................

    You do need to declare the gain, the fact you don't need to make a payment doesn't mean you don't make a return.

    Dividends taxed at 40% for you so you owe another 20% and again, a return is required.

    Form 12 is your friend iirc.


  • Registered Users Posts: 4,639 ✭✭✭ CIP4


    Augeo wrote: »
    You do need to declare the gain, the fact you don't need to make a payment doesn't mean you don't make a return.

    Dividends taxed at 40% for you so you owe another 20% and again, a return is required.

    Form 12 is your friend iirc.

    Thanks for this answers all my questions perfect. Do you pay USC/PRSI on it as well or is it just income tax ?


  • Posts: 17,733 ✭✭✭✭ [Deleted User]


    CIP4 wrote: »
    ..............Do you pay USC/PRSI on it as well ..........

    Yup, also collected through the self assessment method.


  • Registered Users Posts: 149 ✭✭ wicklow_hunter


    This has been bugging me for a while,

    Say for example, you Sell and make a profit of €500 on Shares and a dividend is paid which amounts to an extra €50

    Is there Tax payable on the €50 even tho its below the 1270 euro threshold
    Thanks in advance 


  • Registered Users Posts: 4,639 ✭✭✭ CIP4


    This has been bugging me for a while,

    Say for example, you Sell and make a profit of €500 on Shares and a dividend is paid which amounts to an extra €50

    Is there Tax payable on the €50 even tho its below the 1270 euro threshold
    Thanks in advance 

    Yep thats right so in other words you always pay tax on the dividends regardless of the amount but on profits for selling shares you are ok if they are less than €1270 per year.


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  • Registered Users Posts: 5,309 ✭✭✭ gavmcg92


    Is there Tax payable on the €50 even tho its below the 1270 euro threshold
    Thanks in advance 

    The threshold is related to Capital Gains. A dividend isn't a Capital Gain. It is an income and is subject income tax.


  • Registered Users Posts: 4,639 ✭✭✭ CIP4


    If I buy stocks on the NYSE for example how does dividends work on these read somewhere US keeps back 30% of the dividends. So if I am paying 40% income tax here in Ireland can the 30% be taken off it and I then pay 10% income tax and PRSI/USC on them to Irish Revenue ?


  • Registered Users Posts: 1,113 ✭✭✭ redlead


    CIP4 wrote: »
    If I buy stocks on the NYSE for example how does dividends work on these read somewhere US keeps back 30% of the dividends. So if I am paying 40% income tax here in Ireland can the 30% be taken off it and I then pay 10% income tax and PRSI/USC on them to Irish Revenue ?

    As I understand it, you should get a W8 Ben form through Degiro. That means the US will take 15% and then you pay another 15% here. Double taxation treaty through Ireland and US


  • Registered Users Posts: 14,544 ✭✭✭✭ Supercell


    So for US stocks is it US 15% + Irish 15% by Degiro + 25% Irish taxation (+USC +PRSI) ...pretty eye-watering if so? If that's a case probably not worth the premium for dividend paying stocks.

    Have a weather station?, why not join the Ireland Weather Network - http://irelandweather.eu/



  • Registered Users Posts: 20,553 ✭✭✭✭ Dempsey


    Supercell wrote: »
    So for US stocks is it US 15% + Irish 15% by Degiro + 25% Irish taxation (+USC +PRSI) ...pretty eye-watering if so? If that's a case probably not worth the premium for dividend paying stocks.

    Surely you fill out the W-8BEN form and avoid paying the US Tax?


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  • Registered Users Posts: 980 ✭✭✭ denismc


    Dempsey wrote: »
    Surely you fill out the W-8BEN form and avoid paying the US Tax?

    No. you still pay tax, I think it is 15% with the form and 30% without, thats just the U.S tax


  • Registered Users Posts: 5,309 ✭✭✭ gavmcg92


    denismc wrote: »
    No. you still pay tax, I think it is 15% with the form and 30% without, thats just the U.S tax

    Quote from https://www.gillenmarkets.com/featured_articles/tax-issues-for-irish-residents.cfm
    Dividends on US Shares
    There is a 30% with-holding tax on US shares for non-US residents, but if you complete a W8-Ben form for your stockbroker, a lower 15% with-holding tax will apply. Your therefore receive 85% of the dividend. You are assessed on the full 100% and the 15% withheld by the US Revenue is deemed as tax already paid by you in accounting for tax due to the Irish Revenue, and for anyone on a marginal tax rate above 15%, then the balance is due to the Irish Revenue. The 15% US With-holding tax is non-refundable so pension accounts cannot reclaim it.


    Quote from https://www.irishtimes.com/business/personal-finance/us-company-shares-have-landed-us-in-hot-water-1.3455684
    The W-8BEN form you would have filed with the US authorities would have seen the rate of tax levied in the US cut in half to 15 per cent on your dividends. But as an Irish taxpayer you would have been due to pay 20 or 40 per cent income tax here, depending on your income.

    Thus, even allowing for the US tax paid, Irish Revenue would have been due either 5 per cent or 25 per cent of the dividend in additional tax.


  • Registered Users Posts: 737 ✭✭✭ vargoo


    Head melter

    Why have they let it get so messy?


  • Registered Users Posts: 67 ✭✭✭ tyler_d


    Sorry I know this is an old thread but I have an query on the US Dividend tax. Some countries seem to have a special double taxation treaty with the US where they pay 0% tax on dividends. Some countries pay 15% but a few like Ireland pay 0% according to the Davys information below. Am I missing something? You can see it in the first answer.

    https://www.davy.ie/binaries/content/assets/davy/private-clients/useful-forms/2018/w-8ben-faq.pdf


  • Site Banned Posts: 280 ✭✭ CertifiedSimp


    I purposely avoid div paying stocks, too complex. Less work to do with taxes too - only need to think of tax when selling.


  • Registered Users Posts: 980 ✭✭✭ denismc


    tyler_d wrote: »
    Sorry I know this is an old thread but I have an query on the US Dividend tax. Some countries seem to have a special double taxation treaty with the US where they pay 0% tax on dividends. Some countries pay 15% but a few like Ireland pay 0% according to the Davys information below. Am I missing something? You can see it in the first answer.

    https://www.davy.ie/binaries/content/assets/davy/private-clients/useful-forms/2018/w-8ben-faq.pdf
    That article is a bit misleading, so if you have completed W-8BEn form you will pay 15% tax to the U.S government, there is also an encashment tax on this side which I think depends on which tax bracket you are in, for me this is 20%.
    So I currently pay 35% on any dividends from the U.S, Any deductions will be made by your broker.


  • Registered Users Posts: 67 ✭✭✭ tyler_d


    Thanks for the rely.


  • Registered Users Posts: 194 ✭✭ outonawing


    denismc wrote: »
    That article is a bit misleading, so if you have completed W-8BEn form you will pay 15% tax to the U.S government, there is also an encashment tax on this side which I think depends on which tax bracket you are in, for me this is 20%.
    So I currently pay 35% on any dividends from the U.S, Any deductions will be made by your broker.
    If you are paying income tax at 20% would you not be paying 15% US and 5% Irish?


  • Registered Users Posts: 980 ✭✭✭ denismc


    outonawing wrote: »
    If you are paying income tax at 20% would you not be paying 15% US and 5% Irish?
    Sorry, I phrased that incorrectly, I pay 15 % in the U.S and 20 % here on any dividends.


  • Registered Users Posts: 1,207 ✭✭✭ ixtlan


    denismc wrote: »
    Sorry, I phrased that incorrectly, I pay 15 % in the U.S and 20 % here on any dividends.

    I'm a bit puzzled by that. I have dividends generated in a US broker. They take 15% withholding, and then I declare the total before withholding in my form 11. The result is that I need to pay tax like it was salary, 40% plus usc plus prsi etc, but the 15% is removed from that. That's at the higher marginal rate. I had assumed that if I was at the lower marginal rate I'd only pay 20%+usc+prsi and again the 15% would be deducated?

    ix.


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  • Registered Users Posts: 194 ✭✭ outonawing


    ixtlan wrote: »
    I'm a bit puzzled by that. I have dividends generated in a US broker. They take 15% withholding, and then I declare the total before withholding in my form 11. The result is that I need to pay tax like it was salary, 40% plus usc plus prsi etc, but the 15% is removed from that. That's at the higher marginal rate. I had assumed that if I was at the lower marginal rate I'd only pay 20%+usc+prsi and again the 15% would be deducated?

    ix.

    I agree with you.


  • Registered Users Posts: 980 ✭✭✭ denismc


    You guys are right, I was just thinking of the taxes deducted directly by the broker.


  • Registered Users Posts: 3,515 ✭✭✭ arleitiss


    Do you need to declare anything to Revenue if you lets say - sell some shares at 6'000 Profit, then reinvest it all without taking anything out from Broker?


  • Registered Users Posts: 194 ✭✭ outonawing


    arleitiss wrote: »
    Do you need to declare anything to Revenue if you lets say - sell some shares at 6'000 Profit, then reinvest it all without taking anything out from Broker?

    You do need to declare your gain, first €1270 exempt from tax, the rest subject to cgt.


  • Registered Users Posts: 3,515 ✭✭✭ arleitiss


    outonawing wrote: »
    You do need to declare your gain, first €1270 exempt from tax, the rest subject to cgt.

    Really? Even if you re-invest it - you're paying tax for something you potentially may lose?


  • Registered Users Posts: 194 ✭✭ outonawing


    arleitiss wrote: »
    Really? Even if you re-invest it - you're paying tax for something you potentially may lose?

    No, you're paying tax on your realised gain. Should you subsequently incur a loss you can put it against a future gain.


  • Registered Users Posts: 11,186 ✭✭✭✭ Geuze


    arleitiss wrote: »
    Do you need to declare anything to Revenue if you lets say - sell some shares at 6'000 Profit, then reinvest it all without taking anything out from Broker?

    It is not relevant what you do with the proceeds of the sale.

    If you make a capital gain, you may have to pay CGT.


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