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TaxRobin
TaxRobin, Tax Consultant
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Experience:  International tax
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I have shares in GE after they had bought out my company where

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I have shares in GE after they had bought out my company where I was working.All of my dividends are being taxed by NRA W/ holding tax is this right. I have filled in forms every year which is sent to me.
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Hello, I'm Keith and happy to help you with your question.

Under Double Taxation Treaties, of which there are too numerous to mention, withholding taxes are allowable as a tax credit against UK tax liabilities. You should declare this as foreign income on your annual self assessment tax return (SA100) using supplementary form SA106.

I do hope I have helped you with your enquiry.
Customer: replied 2 years ago.

my point is should I be paying these taxes, when the company was uk the dividend was not tax under our capital gains, it was under the limit for tax.

Expert:  bigduckontax replied 2 years ago.

Your question was in respect of dividends received net of a withholding tax. Such income is taxed under Income Tax. Capital Gains Tax (CGT) is a tax chargeable on a gain made on a share, and indeed other property as well, when it is sold. There is an Annual Exempt Allowance for CGT.

 

I am at a loss to understand the poor rating given by the questioner. I note that my last post has not yet been read. This post explains the taxation principles regarding shares in an alternative manner. I suggest that the rating requires amendment to a level 3 or higher.

Customer: replied 2 years ago.

I know that there is a Annual exempt allowance for CGT in the UK, Therefor should I not be paying this Tax in the USA,under the Treaties.?

Expert:  bigduckontax replied 2 years ago.
I am not an expert on US taxation, but a few general principles would not go amiss. The tax you pay in the States is allowable against any UK tax liability. However, how are you paying CGT? If you have not disposed of your shares CGT does not normally arise. You mention a with holding tax. That is an entirely different kettle of fish and would apply say to US distributions ie dividends taxed in the States at source. The tax credit conditions apply in both capital gains and income.

If you have not sold your shares then even the States would not apply CGT!

Your situation is, at present utterly confusing. What moneys are you receiving and exactly what tax are the IRS deducting?

Expert:  TaxRobin replied 2 years ago.
Hello,
You stated:
"I know that there is a Annual exempt allowance for CGT in the UK, Therefor should I not be paying this Tax in the USA,under the Treaties.?"
No, the treaty does not say that at all.
The US tax withholding is required by the treaty and allowed.

ARTICLE 10
Dividends
1. Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State.

Article specifically allows the US to require withholding on any dividends paid to a UK resident from a US company.
Normally this is 30% withholding for Nonresident aliens of the US.

BUT
The treaty provides for a lower rate of withholding.

However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State, but if the dividends are beneficially owned by a resident of the other Contracting State, the tax so charged shall not exceed, except as otherwise provided,
a) 5 per cent. of the gross amount of the dividends if the beneficial owner is a company that owns shares representing directly or indirectly at least 10 per cent. of the voting power of the company paying the dividends;
b) 15 per cent. of the gross amount of the dividends in all other cases.

You as an individual would have 15% withheld. If the company withheld more for the US then you would need to supply them with a form W8 BEN.
This form is used to claim the treaty provision for lower withholding.
If you did not give this form or they did not request it and withheld the higher 30% you can file a US 1040NR form and request the refund for the difference.

If you sell you would not be taxed on the gain of your US company holdings but dividends are not exempted in teh US only the % is lessened.
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Experience: International tax
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