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bigduckontax
bigduckontax, Accountant
Category: Tax
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I have received from my stockbroker the fact that I received

Customer Question

I have received from my stockbroker the fact that I received dividends on an ETF on which no tax has been paid. Am I eligible to not pay tax at all? The ETF is based in Ireland.
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.

Hello, I am Keith, one of the experts on Just Answer, and happy to help you with your question.

Here is the view of Morning Star:

'While US investors can take advantage of some ETF tax benefits, the same is not true in Britain. ETFs are not given special treatment in the UK. In general, when it comes to taxes, ETFs and traditional funds are treated the same.'

The Financial Times also notes that:

'Gains from ETFs are taxed as income in the hands of investors, rather than the less-penal capital gains tax (CGT) rates of 18 or 28 per cent which normally apply to investment funds and shares'

So your income from your Irish EFT's will be subject to UK Income Tax. Under the Double Taxation Convention between the UK and Ireland any tax deducted by Ireland would be allowed as a tax credit against any UK taxation on the same income stream, but you tell me that no tax was deducted and anyway the Convention does not protect individuals from differences in rates of taxation.

You will be liable to UK Income Tax at your marginal rate for any dividends received. You should declare these on your self assessment tax return as income from foriegn shares.

I am so sorry to have to rain on your parade.

bigduckontax and 2 other Tax Specialists are ready to help you
Expert:  bigduckontax replied 2 years ago.
Thank you for your support.