DiviTax FAQs

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What is DiviTax?

DiviTax is a state-of-the-art software system created by Taxback, which allows investors, banks, brokers and other financial intermediaries to create, provide and share documentation related to the dividend withholding tax relief process.

DiviTax is a secure, online tax documentation workflow system.

What is Dividend Withholding Tax?

Dividend Withholding Tax (DWT) is a tax applied by governments on dividend (and in some cases, interest) payments made to non-resident investors.

In some countries, residents and non-residents alike are subject to DWT. DiviTax provides DWT relief services for investors who are not resident in the country that withheld tax from a dividend.

What is DWT Relief?

A non-resident investor can obtain ‘relief’ from DWT by requesting a tax refund from the government that deducted tax from the dividend, if the investor qualifies. Countries that enter into income tax treaties with other countries customarily provide reduced withholding tax rates for investors. A typical treaty rate for dividends paid to non-residents who reside in treaty countries is 15% although this can differ depending on the country of residence.

DiviTax assists investors who suffered DWT recover the excess amount of tax withheld from the foreign government by determining if the investor is entitled to a refund. The system does this by:

  • Collecting the required documentation to support the reclaim from the investor and any financial intermediaries such as banks and brokers
  • Compiling and filing the reclaim application on the investor’s behalf
  • Collecting the tax refund from the foreign government.

How would I know if ‘excess tax’ has been withheld from my dividend? Is excess tax always deducted?

It depends. Some countries allow non-resident investors to obtain ‘relief-at-source’ if certain documentation is provided to the company paying the dividends, prior to the dividend payment. This means that the investor can receive the dividend with the ‘treaty rate’ of tax withheld.

However, other countries do not allow ‘relief-at-source’ and will always deduct the highest rate of withholding tax applicable to that country. This is known as the ‘statutory tax rate’. In cases where the statutory tax rate is applied, the only means to obtain tax relief is to file a tax reclaim application with the foreign government.

What are the statutory withholding tax rates for dividends paid to non-residents?

The table below reflects the statutory withholding tax rates for dividends paid to non-residents, in the countries where DiviTax provides a DWT refund service.

Country Statutory DWT rate
Belgium 25%
Canada 25%
Denmark 27%
Finland 30%
France 30%
Germany 26.375%
Ireland 20%
Norway 25%
Sweden 30%
Switzerland 35%
United States 30%

If you suffered any of the statutory tax rates listed above, you may be entitled to a tax refund depending on where you reside, and whether you are an individual or a legal entity such as a company, among other factors. If you have suffered the statutory tax rate in any of the above countries, use the DiviTax DWT calculator here to estimate your DWT refund.

Can I file the tax reclaim application myself?

Like everything in the world of tax, as the taxpayer, you can file the DWT reclaim yourself. However, the cross-border tax reclaim process can be complex. Specific documentation must be provided to support the tax reclaim request, and the process from beginning to end can take several months. Why not let DiviTax– the tax reclaim specialists - do the work for you? Our years of experience mean that we have the relationships and specialist knowledge to streamline the process.

I received foreign dividends in previous years. Can I receive refunds for these dividends?

Yes, although the time frame for claiming back withholding tax varies from country to country. DiviTax contains a detailed knowledge base for each of the countries listed above, and can provide an immediate report of the ‘look-back’ period allowed in each country.

The custodian that holds my investments doesn’t provide DWT relief services? Could a custodian use DiviTax?

Absolutely! DiviTax was designed to connect multiple stakeholders including the end investor, the custodian bank or broker that holds the investor’s investments, the financial institution in the foreign market that withholds the tax on behalf of the dividend paying company, and even the foreign tax authority.

DiviTax provides a superior service because documents can be reviewed, signed, approved and shared online. Traditionally, the DWT reclaim process has experienced problems such as forms lost in the post, or the same form posted repeatedly. With DiviTax, each document collected is analysed to determine where it can be used again, to maximise the efficiency of the tax reclaim process and reduce the risk and cost involved with posting forms.

How much does DiviTax charge to file tax reclaims?

It depends. Once we determine the countries where tax reclaims can be filed (based on the investor’s qualification), the complexity of the documentation that is required and whether the assistance of your custodian or foreign financial intermediary is required, we will confirm the fee that will be charged, and obtain your permission to proceed. DiviTax will collect the tax refund on the investor’s behalf, and deduct the processing fee before the refund is remitted to the investor. In short, the processing fee is not paid until the tax reclaim is approved and paid by the foreign government.

What is the next step?

Once you’ve signed up for our service, we will disclose the processing fee(s) upon confirmation that the DWT refund in question meets our minimum threshold for filing tax reclaims, and confirm whether your DWT reclaim requires the involvement of a custodian bank or broker. You simply have to provide us documentation, according to our instructions, and then we do the filing. We will liaise with the foreign governments on your behalf, so you don’t have to.