Dividend Tax Rate in different countries in 2018

Dividends are a part of the income of a joint-stock company (or another entity), which is distributed among the participants. This profit is divided in proportion to the number of shares. Businessmen, who are focused towards international business and want to open a company in Europe or Asia, or open a bank account in European or Asian countries, when choosing jurisdiction, take into account the taxation of the state. We focus your attention on tax rates, especially tax dividends in different countries, that are popular for doing business.

Country

Tax Rate

Ukraine Double Taxation Avoidance Agreement

Russia Double Taxation Avoidance Agreement
Dividend Tax in the UK

The first £5,000 of income from dividends are not taxed, regardless of the availability of other income of the taxpayer. This amount is taxed at 7,5% and at higher rates for those, who have a higher income from other sources (32,5%, 38,1%).

Limited liability companies usually carry out payment of dividends. This distinguishes them from partnerships (LLP and LP), in which instead of paying dividends, profits are distributed on terms defined in the partnership agreement.

Provided that the partners are offshore companies and the members or directors of such companies are not resident in the United Kingdom, there is no trade with the UK. If the partnership is controlled outside the United Kingdom, then the partnership and its members are not taxable in this jurisdiction.

At the same time, it is necessary to submit financial statements on trading activities, including abroad.

A participant of a non-resident partnership may be subject to income tax only in case of receiving a profit of Tax on Trading Income in the UK. If there is an agreement on avoidance of double taxation, such tax that is usually paid at the place of residence.

Dividends in Ukraine can be taxed. If in the UK, then the rate should not exceed 5% of the total amount of dividends if the right to dividends is owned by a company that controls directly or directly, in the case of the UK, at least 20% of the voting capital of the company that pays dividends, and in the case of Ukraine at least 20% of the authorized capital. In other cases, 10% (according to the latest protocol of the Cabinet of Ministers it is planned to increase to 15%)

Other types of income tax (not dividends, interest, royalties), regardless of the source of their origin, other income tax paid from the trust or from the property of the deceased person, are taxed only at the place of residence of the taxpayer.

Can be taxed in the Russian Federation. In the UK, then the tax should not exceed 10 percent of the gross amount of dividends

Any other kind of income taxation are paid in enterprises place of residence.

Dividend Tax in Czech Republic 15 % In the Czech Republic, the tax should not exceed 5% of the total amount of dividends, if the company has the right to dividends, and this company owns at least 25% of the company capital that pays dividends. In other cases, the tax should not exceed 15% In the Czech Republic, the tax can not exceed 10% of the total amount of dividends.

Dividend Tax in Hungary

Dividends paid by Hungarian companies to foreign legal entities are not taxed, individuals are paid - 16% in Hungary, the tax should not exceed 5% of the total amount of dividends if the company has the right to dividends, and this company owns at least 25% of the company capital that pays dividends. In other cases it should not exceed 15% The tax should not exceed 10% of the total amount of dividends.
Dividend Tax in Cyprus

No tax on dividends.

If the recipient is a resident of Cyprus, the tax is levied on defense from dividends - 17%.

Should not exceed 5% of the total amount of dividends, if the beneficial owner owns at least 20% of the company capital that pays dividends, or invested in the acquisition of shares or other rights of the company in an equivalent of not less than 10,000 euros. In other cases, it should not exceed 15% of the total amount of dividends

should not exceed 5% of the total amount of dividends if the person having the actual right to dividends directly invested in the company capital that are paying the dividends an amount equivalent to not less than 100,000 euros.

10% of the total amount of dividends in all other cases

Dividend Tax in Singapore

Singapore private resident company are not taxed.

5% of the total amount of dividends if the person having the actual right to them is a company that directly owns at least 15 percent of the company capital that are paying the dividends;

10% of the total amount of dividends in all other cases;

with respect to payments made by the real estate investment fund: 10% of the total amount of payments.

Dividend Tax in Canada

When dividends are paid to non-residents, a tax is levied at the source. At the same time, the recipient receives a tax credit, which can be reduced by subsequent taxes. The rates depend on the income level and the province. A federal rate should also be payed.

(There is an option to replace the salary of the director with payment of dividends, in which case the tax rate for dividends will be lower than the income tax rate for wages. On the other hand, it will be impossible to deduct contributions to the pension fund and make tax deductions)

A non-resident director is not considered employed in Canada unless he or she attends meetings and performs other functions directly in Canada. Payments to the non-resident director for participation in meetings outside Canada via electronic communication, for example, via teleconference, are not taxed in Canada. If services are only partially in Canada, the employer deducts the income tax based on the actual time spent in Canada.

5% of the total amount of dividends if the right to dividends is actually owned by a company that directly or indirectly controls. At least 20% of the capital with voting rights of the company that pays dividends

Ukraine company at least 20% of the statutory fund of the company that pays out dividends.

15% of the total amount of dividends in the case of dividends paid by an investment corporation owned by a non-resident, which is a resident of Canada, and in all other cases

5% of the total amount of dividends if the person having the actual right to them is a company that directly owns at least 15 percent of the capital of the company paying the dividends;

10% of the total amount of dividends in all other cases;

with respect to payments made by the real estate investment fund: 10% of the total amount of payments.

Dividend Tax in Hong Kong

There is no tax on dividence.

There is no Double Taxation Avoidance Agreement.

5% of the total amount of dividends if the person having the actual right to them is a company that directly owns at least 15 percent of the company capital;

10% of the total amount of dividends in all other cases.

Company registration in Europe or Asia.

When choosing a jurisdiction for receiving dividends, it is necessary to pay attention to the organizational and legal form of the company, which pays dividends, the composition of the founders, the distribution of property, the right to vote. Obviously, you need to consider the tax rate, and the existence of double taxation avoidance agreement.

So, usually only for local resident companies acceptable tax rates are set. At the same time, if the recipient of dividends owns a significant stake in the company (20-25%) or the prevailing right to vote, then if there is double taxation avoidance agreement, the tax rate can be significantly reduced.

In addition, Agreement for Avoidance of Double Taxation is important if the rate in the country is higher than stipulated by the agreement. Or if the tax rate is zero and the agreement is completely absent. In the first case, the rate provided by the agreement is applied, while in the second case the beneficiary of the dividends will be taxed in full at the rate of the country of his residence.

If we are talking about the UK partnership, in order to pay zero taxation, it is necessary to comply with the conditions of residency of participants and trade outside of the country.

Based on the analysis of dividend tax rates and the terms of agreements for the avoidance of double taxation, it is most favorable for this type of income to set up a company in Singapore, open a company in Hong Kong, register a company in Cyprus, or to setting up a company in Hungary. If the profit is distributed within the framework of the partnership, if the above conditions are met, it is quite acceptable for registered UK Company. It is also necessary to pay attention to attractive tax conditions for those who decided to start business in Canada.

Company registration in Europe and Company registration in Asia

Contact the experienced specialists of our company, who will provide you with professional support at all stages of company registration or opening a corporate account in Europe or Asia.