As investors, we all know how exciting it is to make a profit on investments. And we all know how frustrating it is to see a high percentage of these profits go to taxes. That is why we are excited to announce that eToro will be implementing a tax calculating system that will allow our users to keep more of their cash dividends.
I definitely want to keep more money
Currently, when non-US residents invest in US stocks, we are required to withhold 30% of their dividends and pay it to the US Internal Revenue Service (IRS) on their behalf. This is calculated as follows:
Dividend Payment – 30% of taxes withheld = the dividend payment you receive.
However, if your country has a tax treaty with the US, we can withhold less of your cash dividends for taxes, meaning that you receive more money. The amount withheld differs per country and is subject to change based on that country’s tax agreement with the US.
What do I need to do?
- If you are eligible, based on your country of residence and tax country, you will receive the option to update the W-8BEN within the tax treaty benefit part of the form the next time you log in. Please note, this is a form you have already partially filled out, and now you will be filling out the tax treaty benefit part of the form.
- When you see the form after you log in, check the boxes and click submit.
- Make sure that when you signed up for eToro you entered your Tax Identification Number (TIN).
That’s it, you are ready to go. However, failure to sign the form means that eToro is required to continue to withhold 30% of your dividends and pay it to the IRS. The tax treaty benefit will only apply to dividend payments after you sign the Tax Treaty Benefitform.
Why do I need to do this?
The IRS requires non-US citizens to pay taxes on dividends they receive from US-based companies. Since eToro provides you with access to invest in US stocks, we are required by the IRS to pay those taxes, as opposed to the IRS going out and collecting it from non-US citizens.
Ready to go?
Simply log into your account and claim your Tax Treaty Benefits . You can access the form directly here.
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. Customers should seek independent advice”.
The content that will be discussed is intended for information and educational purposes only and should not be considered investment advice or investment recommendation. It is strictly not intended to provide, and should not be relied on for, tax or accounting advice, you should consult your own tax, and accounting advisors.