International Withholding Tax on Dividends: W-8BEN, Rates and Reclaims

What withholding tax is

When a company pays a dividend to a shareholder who lives abroad, the company’s home country usually keeps a slice as tax and passes on the rest. That slice is withholding tax. It is deducted automatically by the company’s paying agent or your broker, so most investors only notice it as a gap between the dividend announced and the cash received. The investor may then owe tax on the same dividend in their own country. Double tax treaties exist to stop the same income being taxed twice in full: they cap the rate the source country may withhold, and the investor’s home country normally gives a credit for tax paid abroad up to that cap. Interest and capital gains are treated differently and are often not taxed by the source country at all, so for most investors this is mainly a dividend issue.

Default rates in major markets

Each country sets its own rate for non-resident shareholders. The figures below are the standard rates on dividends paid to individual investors in 2026; treaties often reduce them, either at source or through a refund.

• United States: 30%, cut to 15% for residents of most treaty countries, including the UK, Ireland, Portugal, Spain, France, Germany, Italy, the Netherlands, Canada and Australia. India’s treaty rate is 25%, and residents of countries without a US treaty, such as Brazil, Singapore, Hong Kong and the United Arab Emirates, pay the full 30%.
• Switzerland: 35%, with a refund down to the treaty rate, usually 15%, claimed from the Swiss tax authorities.
• Germany: 26.375% including the solidarity surcharge, with refunds down to the treaty rate claimed from the Federal Central Tax Office.
• France: 12.8% for individuals.
• Italy 26%, Ireland 25%, Portugal 25% and Spain 19%; Ireland exempts residents of EU and treaty countries who file the required declaration.
• Netherlands: 15%. United Kingdom: nothing, as the UK does not withhold tax on dividends.

What the W-8BEN form does

For US shares and US-listed ETFs, the paperwork that matters is IRS Form W-8BEN. By signing it, an individual certifies that they are not a US person, that they are the beneficial owner of the income and, to claim a lower rate, that they live in a country with a US tax treaty. Despite the IRS heading, the form is not sent to the IRS. It goes to the withholding agent, which for most investors is their broker, and most brokers collect it online when you open an account or first buy a US security. Once it is accepted, the broker applies the treaty rate automatically.

• It lasts from the date you sign it until the last day of the third calendar year after that: a form signed on 6 October 2026 stays valid until 31 December 2029.
• It stops being valid earlier if your circumstances change, for example if you move to another country, and you are expected to tell your broker within 30 days.
• Without a valid form, US dividends are withheld at 30%, or at the backup withholding rate if the broker lacks the information it needs.
• Tax withheld above the correct rate can be reclaimed from the IRS by filing a non-resident return, Form 1040-NR, which is rarely worth the effort for small amounts.

A worked example

Imagine a resident of Portugal holding US shares that pay $1,000 of dividends in a year. Without a W-8BEN, the broker withholds 30% and $700 arrives. With a valid form, 15% is withheld and $850 arrives, a difference of $150 a year on the same shares. Then comes tax at home. Portugal taxes foreign dividends at 28% unless the investor opts to add them to their other income, and gives a credit for the US tax capped at the 15% treaty rate, so about $130 more is due in Portugal and the total stays at 28%. Foreign dividends are declared in Annex J of the Portuguese return. Without the form, the extra 15% taken by the US cannot be credited in Portugal; it has to be reclaimed from the IRS, or it is lost.

UK residents face a twist. For 2026/27 the first £500 of dividends is covered by the dividend allowance, and dividends above it are taxed at 10.75% for basic-rate, 35.75% for higher-rate and 39.35% for additional-rate taxpayers. Foreign tax credit relief is limited to the lower of the foreign tax allowed by the treaty and the UK tax on the same income. A basic-rate taxpayer who has 15% withheld on a US dividend can therefore offset only 10.75%, and the rest is a cost; within the £500 allowance there is no UK tax to offset at all. In an ISA, US dividends still normally lose 15%, because the US does not recognise the wrapper, while the US–UK treaty exempts dividends paid to UK pension schemes, so some SIPP providers can receive them free of US tax.

A treaty decides how much a foreign country may keep. A missing or expired form decides whether you get that rate at all.

Why the fund structure matters

Funds add another layer. An Irish-domiciled UCITS ETF that holds US shares pays 15% US withholding inside the fund under the US–Ireland treaty, and Ireland generally does not withhold on what the fund pays out to non-resident investors. That 15% shows up in the fund’s returns rather than on your statement, so it cannot be credited against your tax at home. A US-domiciled ETF bought directly pays out with 15% withheld once a W-8BEN is in place, and that tax can be credited, but EU retail investors usually cannot buy US-listed ETFs, and non-residents holding US assets worth more than $60,000 face a US estate tax filing requirement when they die. Accumulating funds, which reinvest dividends instead of paying them out, still suffer withholding inside the fund; they only change when and how you are taxed at home.

What you can do

• Check that a W-8BEN is on file with every broker that holds US shares or ETFs for you, and note the date it expires.
• Look at a dividend statement: the tax withheld should match the treaty rate for your country of residence.
• For Swiss, German or other high-withholding shares, weigh the refund process, which can take months and may require certified forms, against the size of the dividend.
• Keep records of foreign tax withheld, because you will need them to claim the credit on your tax return.
• Remember that the US generally does not tax non-residents’ capital gains on US shares, and most US bank and bond interest is exempt from withholding.

Tax rules depend on where you live and on your circumstances, and they change. The rates above were checked in early October 2026. This article is general education, not tax advice; a tax adviser or your country’s tax authority can confirm how the rules apply to you.

This article is educational and general in nature. It isn’t personalized investment, tax, or legal advice — always weigh your own circumstances, or talk to a licensed professional, before making financial decisions.

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