eToro to implement tax calculating system allowing traders to keep more of their cash dividends
Online broker eToro announces that it will be implementing a tax calculating system that will allow our users to keep more of their cash dividends.
Currently, when non-US residents invest in US stocks, eToro is 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, eToro 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.
- 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).
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 Benefit form.
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, eToro is required by the IRS to pay those taxes, as opposed to the IRS going out and collecting it from non-US citizens.
To make use of the new system, log into your account and claim your Tax Treaty Benefits.