How much more tax will I pay on dividends for US stocks as an Irish tax resident?

[mdwhite]

I'm a Canadian citizen living in Ireland. I'm an Irish tax resident.

I bought some US-based stocks on Degiro and eToro. e.g. Apple, Microsoft, Coca-cola.

Ireland has a double taxation treaty with the US: https://www.revenue.ie/en/tax-profe...ble-taxation-treaties/@seekerofgrace-1997.pdf

I can see on my Degiro account that I am being charged 15% as per the taxation treaty. I'm assuming that the online brokerages pay the US government for me, as I have filled out a W-8BEN form.

I know that I need to fill out a Form 12 to fulfil my Irish tax obligations: https://www.revenue.ie/en/additional-incomes/dividend-income/index.aspx

I am in the highest tax band for income. e.g. My income rolls over into the 40% band.

Example:

Microsoft Dividend: $2.48/ year

• - 15% US tax treaty withholding tax = $2.11

How much more tax will be taken off by the Irish government?

 

[njehia]

@mdwhite Have you brought the dividend income into Ireland? Assuming you’re domiciled in Canada you should only be subject to Irish tax on investment income that is remitted into Ireland (you may be subject to tax in Canada though).

 

[seth504]

@njehia THIS!

if you are not domiciled in Ireland you only have to pay taxes on gains remitted to Ireland. If you sell stock in DeGiro and cash it to a Canadian account, you are not subject to Irish CGT or tax on dividends.

 

[mdwhite]

@seth504 I live in Ireland.

 

[seth504]

@mdwhite Domicile is different than resident or tax resident.

You are only domiciled in Ireland mostly if you were born there, or if you have lived there for a long time and requested to be domiciled there (and even in that case, it's hard). This is true even if you acquire the Irish Citizenship.

From the Revenue dept: "Everyone has a ‘domicile of origin’ at birth (usually the domicile of the father). You keep your domicile of origin unless you choose to gain a new domicile". Source.

If you were born in Canada you are not domiciled in Ireland so you only have to pay tax in Ireland for income/gains originated outside, if you bring them to Ireland. This is true for stocks, rents, etc, kept abroad and cashed abroad (and money never brought to Ireland).

The only exception to that is ETFs, which are taxed in the EU country you are rax resident.

 

[njehia]

@seth504 All of this is correct OP and there is nothing untoward here - it’s a well-worn principle which has been around for decades. Further information here:
Irish Tax for Ex Pats. The sections on ‘Residence and Domicile’ and ‘Remittance basis of taxation’ are relevant. It also may offer you some tax planning possibilities if you think you will be here for some time.

 

[jakigirl2000]

@seth504 By this logic if I buy ETFs on a German app like Interactive Brokers, can I change my domiciled status to there to avoid the crap 8 year thing we have going on? I lived there 4 of 5 years, currently back in Ireland but likely to return in two years.

 

[seth504]

@jakigirl2000 I mentioned, this does not apply to ETFs. EU ETFs are taxed where you are tax resident in the EU.

Also, domicile is not the same as tax resident. You can't change your domicile easily.

Buy yes, if you are not domiciled in Ireland, you can have an IBKR account outside Ireland, sell and buy stocks, make money, and if you never bring it to Ireland you don't owe taxes to the Revenue dept. All except EU ETFS. This is not some magic or logic, its called tax remittance. Same way an Italian guy living in Cork and renting his home in Rome does not owe taxes for this rent to Ireland.

But if you were born in Ireland then you can't do that, as an individual domiciled in Ireland you are liable for all your worldwide income.

 

[singingmichelle74]

@seth504 So that means then that if you are living in Ireland as a non-dom you should go for an IBKR account with any IB entity (e.g. Luxembourg) other than the IBIE one?

 

[seth504]

@singingmichelle74 I am not sure about that, not a solicitor or tax expert, but I believe what matters is where the broker holds your shares (the entity) and where you cash it (bank account) when selling. If they're both outside Ireland and never bring and of this money in, you are good to go.

 

[stpetersadvocate]

@seth504 Alright, I'll make sure to get that checked then!

 

[seth504]

@stpetersadvocate When in doubt, send an inquiry to the Revenue dept with your specific case or double check with a tax advisor.

 

[shairozdewji]

@jakigirl2000 Domicile is hard to change. It's usually where you or your father were born.

You can only really change it if you show evidence that you never want to move back to Ireland (e.g. renounce Irish passport and stuff).

 

[njehia]

@jakigirl2000 In short - no. Changing domicile is immensely difficult and effectively means cutting all ties with your original country. It would be a long and arduous process to convince Revenue that you are truly domiciled elsewhere. I deal with people who have lived abroad for over 20 years and who still retain their Irish domicile as it is so difficult to change.

Edited to add - it’s not just an Irish thing btw, it’s a global principle adopted by most countries. It would be equally difficult for the OP to lose his/her Canadian domicile.

 

[skepticonthefence]

@seth504 so, for those who are not Irish domiciled, does that mean that they don't have to pay anything else on top of the 15% already paid through Degiro?

 

[seth504]

@skepticonthefence Yes, IF you don't bring the money to Ireland (you can't cash it on an account you use to pay for things in Ireland#.

And only for stocks, tax remittance does not apply to EU ETFs.

 

[coffeeandprayer]

@mdwhite As you're already in the highest tax band, that's where you're dividends will be taxed.

 

[mdwhite]

@coffeeandprayer So it will be 40% of the dividends? (US takes 15 and Ireland takes 25%). Ouch, that makes reinvesting harder.

 

[hubies]

@mdwhite You get taxed capital gains tax, usually it’s 33% for domestic stocks. US tho unfortunately is 40%.

 

[lynj]

@mdwhite You'll be taxed at your marginal rate and given a credit for the us tax deducted. Fill in the gross euro value not the nett after the 15% tax was withheld. Don't try to claim for the 15% again as the system already takes it into account in its calculations.