How can I see if I checked US income tax treaty in IB account?

Investing / Brokers
1

Hi,

I created an IB account 6 months ago without much knowledge. Recently I read the MrRIP “Interactive Brokers 101” post and saw that you should check the “Do you qualify for the benefits of a US income tax treaty?” bit. I’m not sure I did, and I would like to check but I can’t find this information anywhere in the account.

Does anyone know where I can see it? And what happens if I didn’t?

Thanks!

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I am not sure, but I think you need to go your into your Account Settings, then click the (i) button next to your profile and then Update Tax Forms at the bottom.

Another simple way is to check how much dividends are being withheld.

If you go to your reports, check the dividends from U.S. Stocks and check how much was withheld. If 15% are withheld, you are good to go. If it’s 30%, you will need to fill the W8-BEN form.

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Thanks! Both methods worked :slight_smile: I updated it.

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Damn, thanks dudes for letting me know about this. I also had this off and I’ve lost 15% of dividends. :frowning:

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Haha glad it helped. I asked IB support about it and they say the following:

For past Dividends after March 2019 the withholding tax rate gets adjusted and paid back into your account. Previous ones you will have to reclaim with the help of your local tax authority and a tax advisor.

This works fine for me because I just started investing this year and all the dividends I received are starting March. I get back my $45! :slight_smile:

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After my first dividends I found out I had the wrong configuration in the W8-BEN form.
I tried to update it, but this option doesn’t show in edit mode.
I’m trying to contact IB, but it’s very slow and all they say is: “you should see the option in …”, “you’re probably following the wrong navigation…”. Even after I sent a file with all the screens I saw… The option it’s not there.
Anyone had the same problem?

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I could finally change it. After a week of searching the internet and trying to remove and add the Tax Residency…

We just need to change something in the address in the previous page (empty spaces don’t work). Then the W8-BEN will appear in the last step.

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@Azrael, what do you need to do to receive back the dividends? Was it automatically after you changed the W-8BEN or did you open a ticket with them?

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I think I opened up a ticket and asked about the money that was extra-taxed, and I got the reply I posted above. TBH I’m not even sure they transferred that sum or not.

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I had the same issue and I noticed it only when filling in my tax declaration for 2019. Like @1000000CHF they corrected the US withholding tax for the entire past year. Here is the timeline:

  • April 2019: When opening the IB account, I made a mistake in the W8-BEN form where I didn’t tick the box on tax treaty between US and CH, and forgot to enter the Swiss tax payer ID (= AHV/AVS number)
  • June 2019: First dividends for US-based ETFs, I didn’t notice the 30% US withholding tax
  • Sept and Dec 2019: idem
  • March 2020: While filling in my tax declaration for 2019 (with the DA-1 form), I changed the W8-BEN on the IB platform, they reissued the form (PDF) and I thought that this would apply only for future dividends
  • April 2020: Good surprise, they reimbursed all the 30% US withholding tax they perceived over 2019, then took again the 15% US withholding tax following the tax treaty between US and CH
  • May 2020: The final decision of the VD tax office is to reimburse me the 15% withholding tax, so the stars are now all aligned

@TraderM, have you filled in your W8-BEN form completely?

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i am just learning also about this! :sweat_smile:

IB update is done, so i am only WTH 15%.

What is the DA-1 for? So you recover the other 15% paid?

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Yes, you fill in the DA-1 form and submit to your canton tax office. They will use it to know the amount to reimburse your 15% US withholding tax, and settle things between tax offices of different countries (just imagine their paperwork).

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You are imagining things. There’s nothing to settle here, 15% stays in the US. The swiss will not claw it back from the US - there’s simply no such provision in the tax treaty. The reimbursement you receive via DA-1 is basically a credit from your future owed swiss taxes on this income.

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No need to be that harsh, I guess it’s easy to get this misconception. To clear things out, I think it’s like this (correct me if I’m wrong):

  • by default, foreign individuals are subject to 30% withholding tax on dividend income received in the US
  • this tax can be reduced to 15% by submitting the W-8BEN form (Certificate of Foreign Status of Beneficial Owner)
  • the W-8BEN is one of the steps when opening at account at IB
  • in your Swiss tax declaration, you declare all your income, including the one from the US, and you have to pay income tax on it, effectively being taxed twice
  • you can reclaim the income tax by submitting the DA-1 form
  • however, the maximum that you can reclaim is the amount of the withholding tax paid to the US (15%), and maybe that’s where the confusion comes from
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The maximum you can claim is the non-refundable part of foreign taxes: 15% in case of US. Even if you had 30% withheld by not filling W8-BEN correctly, the idea is that you can still claim 15% of those back from the US yourself, so the swiss will still only refund you at most 15%.

And this at most 15%. Understand this refund is not free money, and not a way to tax free dividends, but merely a double taxation relief. If you’re going to pay >15% in swiss taxes anyway, it’s all good on the swiss side and they will have no problems giving you full 15%. But if you earn less, there are tables that will be crossreferenced with your income to determine how much they will give you and it will be less.

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That’s what I wrote. The Swiss tax office says something like: “So you made this income in USA and you already paid tax there. In this case we will pay you back some of the Swiss tax you will owe due to this income, but not more than you paid USA”

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I have just opened an IB account (thanks to this great forum!). I am not quite sure if I have set up the tax form correctly. In my profile it says

Tax Forms: Combined CRS/IRS Tax Form

which looks like this:

image

Is this correct or should the form be W-8BEN?

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AFAIK, if you open an account and put “Switzerland” as the place of your tax residency, it makes you fill out all the information needed. I never manually filled out any US tax documents ever but I see the correct amount of tax withheld (15% vs. 30%).

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As far as I remember I also just filled out all the information and put “Switzerland” as the place of tax residency. Could you check what is says under “Tax Forms” on your profile information (Account Settings > Profile > Info (i) on your profile)?
Otherwise I guess I will have to wait and check the withold tax (15% vs 30%).

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Ah I see what you mean! Yes it says “Switzerland” under Tax ID and I can see also the Substitute Form W-8BEN, which is basically where all the info they need is kept and you can update if needed. So you should be fine.