{"id":175426,"date":"2020-08-27T15:55:00","date_gmt":"2020-08-27T19:55:00","guid":{"rendered":"https:\/\/ibkrcampus.com\/trading-lessons\/tax-treaties\/"},"modified":"2025-07-30T11:48:26","modified_gmt":"2025-07-30T15:48:26","slug":"tax-treaties","status":"publish","type":"trading-lessons","link":"https:\/\/www.interactivebrokers.com\/campus\/trading-lessons\/tax-treaties\/","title":{"rendered":"Tax Treaties"},"content":{"rendered":"

The US has tax treaties with approximately 70 countries. They are listed on IRS.gov<\/a> and can be accessed for free. Do not assume that your country is not included, as some countries with treaties may surprise you given overall US relations with those countries.<\/p>\n

Tax Withholding Rate<\/h4>\n

\u2022 Most, but not all, tax treaties lower withholding on investment income (primarily dividend income) from 30%, which is what is required by the US income tax code (statutory withholding).
\n\u2022 The most common treaty rate is 15% or a 50% reduction from the statutory amount.
\n\u2022 Some treaties lower the rate further to 10%, while others only reduce it slightly to 25%.
\n\u2022 Many countries allow for a credit to be taken against tax due in your home country. This is country specific, so it is best to consult a local tax advisor on this issue.<\/p>\n

W-8BEN – Keep it Current<\/h4>\n

\u2022 Do not forget that your W-8 on file with the account holder must be current.
\n\u2022 Remember that they expire every three years and must be updated if you move.
\n\u2022 If your W-8 lapses, then withholding at 28% on income kicks in. Theoretically, this might be better if you live in a country without a tax treaty as 28% withholding is better than the 30% withholding you are subject to;
\n\u2022 But 28% withholding includes withholding on gross proceeds from securities sales, whereas having a valid W-8 exempts proceeds from withholding.<\/p>\n

FATCA<\/h4>\n

\u2022 The Foreign Account Tax Compliance Act \u2013 commonly referred to as FATCA – imposes reporting requirements on US entities to foreign government. Aimed at getting US persons to report and pay US taxes on accounts and other income held outside the US, the law has had sweeping impact which has resulted in worldwide information sharing between governments.
\n\u2022 Because of this information sharing it is essential to keep your W-8BEN up to date with all custodians.<\/p>\n","protected":false},"excerpt":{"rendered":"

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