Tax Day has come and gone. Even so,there are many investors with questions regarding withholding taxes, specifically offshore.

One question that has been asked: are there any offshore investment instruments, such as stocks, bonds, etc., whose earnings (i.e., dividends, interest, etc.) that aren’t subject to a withholding tax at the source?

The answer to this question is that it varies from country to country, and it’s dependent upon whether the other country has a treaty arrangement with the U.S. The U.S. has a zero withholding rate for interest paid to residents of countries such as Austria, Denmark, France, Germany and a few others.

It’s presumed that these countries will reciprocate with a zero withholding rate
on interest paid to U.S. citizens. There are also a number of countries with which the U, S. has a zero tax rate on capital gains paid to their residents and the U.S. does not impose capital gains taxes on foreign investors. Dividends are subject to some amount of withholding, which can range between 10% and 30% for dividends paid to residents of different countries.

Withholding by corporations in other countries is also dependent on whether
the other country has an income tax. As far as it can be determined,the island of Bermuda does not have an income tax and they do have an active stock exchange for Bermuda-based companies.

If you would like more information regarding asset protection, trusts, family limited partnerships or the subject of this article please call or email our office.