[Feature Request πŸ”§] SIPP: Remove Withholding Tax on Foreign Dividends

Not so straight forward - international dual tax treaties come into play here. And so, no it can’t be extended just like that - it is not a matter of technology but one of relevant tax laws.

Usually dual tax treaties treat tax wrappers such as ISAs and pension matters such as SIPP very differently. In the case of the USA 30% dividend holding is reduced to 15% via the W8BEN in or out of a ISA.

Most brokers will not claim back tax credits on dividends or income from any other foreign countries - you need to do this by yourself or via a specialist company. See Withholding Tax | Support for further information.

USA taxation on REITS is somewhat more complicated and depends on whether the payments the REIT makes to you are deemed as income, capital gains or a return of capital. To get an idea of this please look at: https://www.clearstream.com/clearstream-en/products-and-services/asset-services/tax-and-certification/tax-treatment-of-u-s-reits-and-rics-1291742.

tldr; SIPP and local tax wrappers (such as ISA) are viewed differently by UK and foreign governments. Generally speaking you are not entitled to receive all foreign income free of withholding tax in an ISA. SIPPs treaties are more generous in this sense. Taxation on USA REITS in general is not the same as taxation on USA dividend income.

For avoidance of doubt: UK REITS: yes, the PID is received net of withholding tax for registered pension schemes. Freetrade is looking at ways to support UK REITS in its SIPP -UK REITs in ISAs πŸ‡¬πŸ‡§ - #118 by Damon.

The above should be taken as my personal opinion. Always consult your tax advisor for tax matters.

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