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Dividend Tax Across Europe


Contributed by BridgeWest
October 2, 2017



The dividend tax is a type of tax levied by each state in Europe at its individual rates on the dividends received by company shareholders or for dividend payments made between companies.

The dividend tax varies across Europe, however, non-resident companies may benefit from a reduced withholding tax rate on dividends under an applicable double tax treaty.

Dividend tax in Northern Europe

In Iceland, the withholding tax on dividends is 20% for those payments made to resident companies and 18% on dividends paid to non-resident companies.

Sweden does not impose a dividend tax when a Swedish resident company makes the dividend payment to another Swedish resident company. In those cases when the dividends are paid to non-resident companies, they are taxed at a 30% withholding tax rate.

Norway imposes a different dividend taxation regime: dividends received by a Norwegian resident company from another Norwegian company or a limited liability company that is an EEA resident are 97% exempt from dividend tax, with the rest of 3% taxed at the usual 25% rate.

In Ireland, the dividend payment received by an Irish resident company from another Irish resident company is generally exempt from tax. Irish companies that receive dividend payments from foreign corporations must pay taxes on that dividend payment, but they can use a credit for underlying corporate and withholding tax. The withholding tax rate on dividends is 20%, unless a double tax treaty applies.

The United Kingdom does not impose a withholding tax on dividends paid by resident companies. Distributions paid by a real estate investment trust are subject to a 20% withholding tax.

There is no imposed withholding tax on dividends in Estonia. The standard corporate income tax (20% of the gross amount) is imposed on resident companies making the dividend distribution. The same rate applies to payments made to a permanent establishment in Estonia belonging to a non-resident company.

Dividend taxation in rest of Europe

Germany imposes a statutory withholding tax rate on dividends of 25% (26.375% including a surcharge) and non-resident companies can benefit from a 40% refund.

France has a 30% withholding tax on dividends for those paid by a French company to a non-resident shareholder.

In Italy, the withholding tax on dividends has a final value of 26%, with a potential refund unless a double tax treaty reduces the standard tax.

The dividend withholding tax in Spain is 19% for those dividend payments made to a non-resident company. This rate may be reduced if the company receiving the payment is a resident in one of the countries with which Spain has signed a double tax treaty or where the EU parent-subsidiary directive applies.

Liechtenstein imposes no withholding tax on the distribution of dividends. Switzerland has a 35% withholding tax on dividends for those payments made to a non-resident company. However, this is reduced to 0% for cross-border payment if certain conditions are met. In Austria, there is no tax on dividend payments made from one resident company to another. Dividend payments made to a non-resident company are subject to a 27.5% withholding tax rate.

Romania levies a 5% withholding tax on dividend payments made to a non-resident company and the same rate applies to payments made by a Romanian company to an EU resident company. Turkey has a 15% withholding tax rate on dividend payments made to a non-resident company, however, this rate may be reduced under a double tax treaty.

The information in this article is not exhaustive. For complete details on the taxation of dividends, we recommend contacting a local tax expert.

 

Tags: Germany | France | United Kingdom | Turkey | Switzerland | Sweden | investment | Austria | Norway | Liechtenstein | Italy | Ireland | Iceland | Romania | Estonia | Spain | Europe | law | dividends | withholding tax | tax

 

 

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