# USA: Withholding Tax



## miky348 (Sep 23, 2010)

Hi,

I am neither a USA citizen nor a green-card holder, and I do not reside in USA. I like to trade into USA stock market and like to know if capital gains are subject to any tax (withholding, CGT)? I know that dividends are subject to 30% withholding, but not sure how are capital gains treated?

Thanks.
Miky


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## 255 (Sep 8, 2018)

miky348 -- Nonresident aliens are subject to no U.S. capital gains tax, but capital gains taxes will likely be paid in your country of origin. Hence no withholding taxes. Cheers, 255


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## shony (Jun 13, 2019)

I think your broker will tax your withholdings (when you withhold) at 10%. It means you receive 10% less.


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## NickZ (Jun 26, 2009)

You'll have to file a W8Ben with your broker. If you do you'll benefit from the treaty tax rate on withholding. Canadians IIRC are at 15% for dividends. 10% for interest.

If you're in Toronto 30% means you didn't file the right paperwork with your broker.


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## JustLurking (Mar 25, 2015)

NickZ said:


> You'll have to file a W8Ben with your broker. If you do you'll benefit from the treaty tax rate on withholding. Canadians IIRC are at 15% for dividends. 10% for interest.
> 
> If you're in Toronto 30% means you didn't file the right paperwork with your broker.


The OP's flags show them as originally from Canada, but now resident in the UAE. In that case, they won't be able to take advantage of the US/Canada tax treaty, and the US has no tax treaty with the UAE, so the 30% US tax on dividends applies. Implemented by broker withholding.

A note for the OP:

If you invest in US stocks through Ireland domiciled ETFs, that will reduce your US tax drag from 30% to 15%. This is the US/Ireland tax treaty rate, and is paid internally by the ETF. However, the ETF then pays you the full remaining 85% of dividends with no further tax interference. If you hold US domiciled ETFs, you would lose 30% of dividends to US tax. So for you, Ireland domiciled ETFs beat US domiciled ones every time.

Of course, if you only want to buy a few specific US stocks, say Apple or Amazon, rather than an S&P 500 tracker ETF or similar, you will have to bear the 30% US dividend tax. No way around that.


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