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Does IBKR return the tax withheld on distributions which are found to be Return on Capital? In most cases, the nature of the distribution (whether it’s a dividend or ROC) is not known until the 1099-DIV report is issued at the end of the year
Thank you for your question. For US dividends that are later reclassified as Return of Capital, IBKR does refund the tax that was initially withheld. However, these refunds typically occur at year-end after the final classification is confirmed on the 1099-DIV report.
For non-US securities, we generally do not return withholdings for reclassifications since these taxes were already withheld at the source.
Please note that in most cases, the true nature of distributions (whether dividend or Return of Capital) is only determined when tax forms are issued at year-end. Please note that IBKR does not provide tax advice. If you have any further questions on this, please consult a tax professional who specializes in your region regarding specific questions. You also may find our webpage helpful: https://spr.ly/TaxInfocampus
We hope this helps!
Hi i live in HK but as an Australian claim the 15% witholding on US dividends. Can you do that rather than the 30% default?
Hello, thank you for reaching out. Generally, tax is withheld at a rate of 30% on payments of US source stock dividends and substitute payments in lieu. The rate of withholding may be reduced if there is a tax treaty between your country of tax residence and the US. Please note that we cannot provide tax advice, but you may find this webpage helpful: https://spr.ly/TaxInfocampus
Please consult a tax professional who specializes in your region regarding specific questions
Do you refund qualified interest income paid as dividends from US shares at the end of each tax year for foreign investors?
Hello, thank you for reaching out. Generally, tax is withheld at a rate of 30% on payments of US source stock dividends and substitute payments in lieu. The rate of withholding may be reduced if there is a tax treaty between your country of tax residence and the US. You may find this webpage helpful: https://spr.ly/TaxInfocampus
Please note that IBKR does not provide tax advice. Please consult a tax professional who specializes in your region regarding specific questions.
Greetings, I am a Macau tax resident (non-U.S. resident in this case), and there is no tax treaty between Macau and the US as i known. I would like to directly invest in 10-year U.S. Treasury bonds through my IBKR account. Q1: Will the interest income and capital gains from buying and selling these Treasury bonds be subject to the 30% withholding tax? Q2: If the 30% withholding tax is levied on the Treasury bond interest due to incorrect tax information (such as an invalid W-8 form), can this charge be refunded after I update the correct tax information? Q3: Following up on Question 2, how long does it typically take for the refund to be processed, and do I need to file an additional tax refund application form? Thanks！
Hello, thank you for reaching out. Virtually every country, however, imposes withholding taxes on dividends paid by local corporations to non-residents. The default rate is 30% although it may be lower if an international tax treaty involving your country exists. Please review this FAQ for more information: https://www.interactivebrokers.com/faq?id=25487889
Please note that we cannot provide tax advice, but you may find this webpage helpful: https://spr.ly/TaxInfocampus
Please consult a tax professional who specializes in your region regarding specific questions.
Is Australia is a treaty country ? Because the MSTY dividend I got seems had 30% withheld by IBKR this screws up div reinvestment and how do I get down to 15% also the tax year of USA and Aus is diff so how does it affect Australian account ? Any ideas ?
Hello, thank you for reaching out. For a non-US citizen, the withholding rate applied to a distribution depends on a number of different factors such as the entity through which your trade is booked, the source of the income and your tax residence (including whether you are eligible for the benefits of a double tax treaty between the United States and your country of tax residence). Please view this FAQ for more information: https://www.interactivebrokers.com/faq?id=52477332
IBKR does not provide any tax advice. Please consult with a tax advisor for further guidance on how to seek relief for any tax withheld. We hope this information is helpful!
Hi For SGOV, the distributions have withholding tax deducted notwithstanding the distributions are made from US T Bill holdings which are exempt from withholding tax. When are withholding tax deductions generally refunded?
Hello PZ, thank you for asking. Distributions from certain ETFs or REITs, such as SGOV, are initially classified as ordinary dividends and subject to U.S. withholding tax at the time of payment—even if the underlying holdings (like U.S. Treasury Bills) are exempt from withholding tax.
Each year, the security issuer provides IBKR with the final tax classification of prior-year distributions (e.g., ordinary dividend, interest, return of capital, capital gain). Based on this information, IBKR reclassifies those distributions and adjusts any withholding tax that was incorrectly applied.
For distributions attributed to tax year 2025, this reclassification and adjustment will occur between January and March 2026. You’ll see these adjustments reflected in your Year-to-Date Activity Statement, and the final classification for each distribution will appear in your Dividend Report. For more information on how to create a detailed custom report such as the Dividend Report: https://www.ibkrguides.com/portfolioanalyst/performanceandstatements/pa_reportpages.htm
This resource may be helpful: https://www.interactivebrokers.com/en/support/tax-nonus-reports.php
We hope this helps!
Hi, for withholding tax credits submitted to IRS by IBKR (under Form 1042-S), does IBKR process and refund the withholding tax? Or does the user need to lodge the claim refund themselves?
Hello, thank you for reaching out. Form 1042S reports all US tax withheld from the type of income being reported, if any tax was refunded or withheld by another agent than the reporter. Remember that once the 1042S – is filed and reported to the US government – in March – the withholding agents cannot obtain refunds from the IRS. Please review this IBKR Campus course for more information.
Clients should consult their tax advisor on how to claim a refund or tax credit. We hope this helps!
am from Macedonia, a have stock from Slovenia, how to pay tax for slovenia stock ( IBKR ) already took 30% and the rest of 70% had to pay, where to pay ?
Hi, thank you for reaching out. To get historical and current tax forms, please review this FAQ: https://www.interactivebrokers.com/faq?id=30115238
We hope this information is helpful!
I am a UK resident tax payer for 2024/25 and just (17 Dec 2025) submitted W-8BEN. Just wonder if my submission can cover the period 6 Apr 2024 to 5 Apr 2025?
Hello, thank you for reaching out. The Form W-8 remains in effect for the period beginning on the date it is signed and ending on the last day of the third succeeding calendar year. IBKR will notify clients in advance when a Form W-8 is about to expire and will present them with the online Tax Form upon login to Client Portal. https://www.interactivebrokers.com/faq?id=27276615
We hope this helps answer your question!
Hello, I am an SG PR looking to invest in MAG7 US-issued Corporate Bonds via my IBKR account, as a means of deriving steady passive coupon income. I have the Form W-8 in place and verified through IBKR — will those bond coupons be subject to Withholding Tax?
Hi, thank you for asking. Yes, IBKR does withhold taxes on certain interest earned. https://www.interactivebrokers.com/faq?id=73513266
Please note that IBKR does not provide tax advice. https://spr.ly/TaxInfocampus
If you have any further questions on this, please consult a tax professional who specializes in your region regarding specific questions.
Hi! I’m a Polish Citizen living and paying all taxes in Ireland. What do I need to do to not pay 30% tax on my dividends from US stocks? How to get refund of overpaid tax for 2025? Thanks! Tomas
Hello, thank you for reaching out. Dividends paid on U.S. stocks will be subject to withholding taxes for non-residents. A completed W8 form will allow for a reduced tax rate if a treaty exists between the United States and the holder’s country of taxation; however a valid W8 only allows for a reduction in the tax rate not an elimination of the tax entirely. Please note:
Dividends paid on U.S. ADR shares are generally withheld at source and will not be eligible for a reduced tax rate.
Clients should consult their tax advisor on how to claim a refund or tax credit.
Please view this FAQ for more information: https://www.interactivebrokers.com/faq?id=32647192
We hope this helps!
Hi! I currently live in Costa Rica. Does Interactive Brokers automatically deduct the 30% withholding on US dividends each time a stock pays a dividend? Also, do I have to provide/submit the W-8 Form? Considering the fact that I´m from Costa Rica? Thanks!
Hi David, thank you for reaching out. IRS Form W-8 is used to certify your status as a non-U.S. taxpayer. It is also used to claim reduced tax withholding on dividends and other income paid with respect to U.S. securities. Without proper documentation, brokers may be required to impose exceptional withholding tax on transactions occurring in the account and/or report the account as non-compliant to tax authorities.
Find a detailed description on how to Update Tax Forms in the Client Portal Users’ Guide. https://www.ibkrguides.com/clientportal/updatetaxform.htm
We hope this helps!
Thanks! Lastly, could you please confirm if Interactive Brokers automatically deduct the 30% withholding on US dividends each time a stock pays a dividend?
Hi David, thank you for asking. In the event you hold a position over the ex-dividend date, your dividend may be subject to withholding tax.
Depending on which entity of Interactive Brokers your account is opened with, and your country of legal residence, IBKR might act as a withholding agent and apply the applicable treaty rates, or the tax might be applied by our clearing agent prior to receipt. In such a case, holders might be unable to take advantage of any country specific rates which may exist.
Clients should consult with a tax advisor for assistance in making a claim for a tax refund on a dividend. Please view this FAQ for more information:https://www.interactivebrokers.com/faq?id=41559348
We hope this helps!
Hi! As a tax resident in Bulgaria, can I submit Form W-8BEN to switch to the 15% (conventional rate) on US dividends? Regards
Hi Mike, thank you for reaching out. Dividends paid on U.S. stocks will be subject to withholding taxes for non-residents. A completed W8 form will allow for a reduced tax rate if a treaty exists between the United States and the holder’s country of taxation; however a valid W8 only allows for a reduction in the tax rate not an elimination of the tax entirely. To update your W-8BEN form, please follow the instructions provided in this FAQ: https://www.interactivebrokers.com/faq?id=32666329
We hope this helps!
What Is the IBKR opinion ?
Hi there, I set up my IBKR account based in Ireland a few weeks ago and I completed the W-8BEN form so that I can be taxed accordingly. I have just received the first dividend payments and I have seen that I have been held 30% despite compliting the W-8BEN form. I am from Spain so they should apply the treaty and tax me at 15% instead of 30%. Why is this happening? Is there any steps that I missed? Is there a way for me to contact or get in touch with IBKR so that they make sure that my info is up-tp-date so that going forward they use the right tax rate? Thanks in advance, Dani
Hi, exchange traded debt (babybond) like TBB and PRH, that listed on nyse, for non us resident, is it qualified to be 0% WHT? How to know the interest income from the babybobd in the market is subjected to tax or not?
Helllo. I am a tax resident of Singapore. I invested in a SPYI US etf and see I am subject to withholding tax on a distribution. However this distribution is deemed as a ‘return on capital’ instead of a dividend. Would be eligible for a refund from ibkr and if so what do I need to do? Any timeline that I need to be aware of?
as a US tax resident, how do you handle withholding taxes for German dividend payers, eg Munich RE? Do I get 15% WH or higher amount? and do you pay the dividend in EUR?
Hello, thank you for reaching out. In the event you hold a position over the ex-dividend date, your dividend may be subject to withholding tax.
Depending on which entity of Interactive Brokers your account is opened with, and your country of legal residence, IBKR might act as a withholding agent and apply the applicable treaty rates, or the tax might be applied by our clearing agent prior to receipt. In such a case, holders might be unable to take advantage of any country specific rates which may exist.
Interactive Brokers can provide clients with Tax Vouchers for German dividends with details of withholding taxes deducted upon request to IBKR Client Services. A fee applies per each request. Please consult with your tax advisor for support on how to proceed with the tax reclaim. Please view this FAQ for more information: https://www.interactivebrokers.com/faq?id=34492032
Hi! I am Hong Kong Resident and live in Hong Kong . Does Interactive Brokers automatically deduct the 30% withholding tax on US dividends for US Corporate Bonds ETF (e.g. Vanguard’s new Target Maturity Corporate Bond ETF , VBCD) each time that ETF pays a dividend? I have submitted the W-8 Form, shall IBKR will refund me those 30% withholding in account as Qualified Interest Income (QII) allows non-U.S. resident investors to receive the portion of a U.S.-domiciled ETF’s dividend derived from U.S. bond interest (qualifying as “portfolio interest”) free of the standard 30% IRS withholding tax?