Are there any withholding taxes?
There are no withholding taxes on dividends or interest paid to non-residents. Royalties or similar payments to a non-resident for intellectual or industrial property rights are liable to withholding tax only if they are for the use of the rights within Cyprus: no tax need be withheld if the rights are used exclusively outside Cyprus. The rate of withholding tax for use of general intellectual or industrial property rights within Cyprus is 10%; rental payments made to non-residents in respect of films shown in Cyprus are subject to withholding tax at 5% of the gross amount, in either case subject to relief under any applicable double taxation treaty.
In accordance with Articles 59 and 60 of Law 4172/2013 (Income Tax Code in force), withholding tax is made directly at source in the following cases: a) payment of pensions to individuals by legal entities, b) insurance payments by social security funds, c) acquisition of business profits by individuals and d) payments or benefits from legal entities to their employees.
Furthermore, under Article 62 of Law 4172 / 2013, the following payments are subject to withholding tax also: a) dividends, b) interests, c) royalties, d) the fees for technical services, management fees, the consulting fees and other fees for similar services, whether rendered in Greece or not, when the recipient of the remuneration is an individual, e) indemnity paid in lump sum or in the form of periodical payment under group insurance pension contracts and f) the surplus value acquired by an individual in case of transferring property.
An exception is provided under conditions for legal entities with tax domicile in Greece, when receiving remuneration for the services referred to in paragraph d.
Furthermore, any legal entity which is not a tax resident in Greece and receives fees for technical services, management fees, consulting fees or remuneration for such services is subject to withholding tax.
Finally, legal entities established in Greece or have a permanent establishment in Greece and receive fees for royalties in accordance with paragraph c’ mentioned above shall not be subject to withholding tax in accordance with Article 64 of Law 4172 / 2013.
For the above mentioned cases, the withholding rates are as follows: a) for dividends fifteen percent (15%), b) for interests fifteen percent (15%), c) for royalties and other payments twenty percent (20%), d) for fees for engineering projects, administration fees, consulting fees or similar services twenty percent (20%), e) for indemnity paid in the form of periodical payment fifteen percent (15%) , whilst for indemnity paid in lump sum up to the amount of forty thousand (40,000) euro ten percent (10%) and for amounts exceeding forty thousand (40,000) euro twenty percent (20%) and f) for the surplus value from the transfer of real property acquired by an individual, fifteen percent (15%).
Furthermore, government authorities, other than companies, are obliged, during the the supply of all kinds of goods or services by individuals or legal entities, in the payment or the issuance of the payment order of their value to withhold income tax, which is calculated upon the net amount of the value of the goods or services at the rate as follows: a) at the rate of one percent (1%) for liquid fuel and tobacco products, b) at the rate of four percent (4%) for other goods and c ) at the rate of eight percent (8%) for the provision of services.
The withholding tax exhausts the tax liability in case the person receiving the payment, other than the fees referred to in subparagraph d, which is subject to withholding tax, is an individual or legal entity that receives fees for services according to case d’ and that neither has a tax residence in Greece, or maintains a permanent establishment in Greece.
If the withholding tax does not exhaust the tax liability, the tax withheld is credited against the income tax to be ascertained from business or corporate income tax of legal entities.
There is no withholding tax (WHT) on dividends paid by UK companies, save for a 20% WHT applied to certain dividends paid in respect of income profits and capital gains of a UK real estate investment trust. Interest and royalties are subject to a 20% WHT unless the rate is reduced under a double tax treaty or exempt under the Interest and Royalties Directive.
In Coal Staff Superannuation Scheme Trustees Limited v Commissioners for Her Majesty's Revenue & Customs  UKFTT 450 (TC), the tax tribunal held that EU law allowed HMRC to charge UK withholding tax on manufactured overseas dividends owned by a pension fund when it did not charge an equivalent tax on manufactured dividends in relation to UK shares. According to the Tribunal, this regime did not breach Art. 63 TFEU. Even if the regime did involve a restriction on the free movement of capital, it was justified for reasons of fiscal cohesion.
Generally speaking, under certain circumstances both income and value added taxes could be subject to withholding. For instance, the Mexican Income Tax Law provides that employers ought to withhold income taxes due on their employees’ salary. Additionally, income tax due by a foreign tax resident that carried out a transaction with a Mexican tax resident is often required to be withheld by the latter.
Concerning value added tax, the following parties could be required to withhold taxes due:
- financial institutions that receive payments in kind or obtain goods by judicial or fiduciary allocation or awarding;
- legal entities that: (a) receive personal independent services from or use goods leased to them by individuals; (b) acquire industrial waste used as consumables for their activities; (c) receive transportation services from individuals or other legal entities; (d) receive services from commission agents that are individuals;
- individuals or legal entities that acquire, temporarily use, sell or lease to foreign tax residents without permanent establishments, tangible assets.
There are no withholding taxes in Gibraltar.
Yes. Interest on loans (where the loan proceeds are used in Japan), dividends on shares of a Japanese corporation (which are not publicly traded), and royalties for use in Japan of intellectual property are subject to withholding tax at the rate of 20.42% (20% national tax and 0.42% special reconstruction income surtax) when paid to nonresident individuals and foreign corporations.
Interest on debt securities issued by a Japanese corporation is subject to withholding tax at the rate of 15.315% (15% national income tax and 0.315% special reconstruction income surtax) when paid to nonresident individuals and foreign corporations. However, there is a special taxation measures whereby interest on (i) Japanese government bonds, Japanese municipal bonds and Japanese corporate bonds each issued in Japan and traded and owned through the Japanese book-entry system and (ii) Japanese “eurobonds” (meaning bonds issued by Japanese corporations outside Japan and interest is paid outside Japan), which is paid to nonresident individuals and foreign corporations, is in principle exempt from Japanese withholding tax, subject to certain documentation and identification requirements being met.
Dividends paid on publicly traded shares of a Japanese corporation are subject to withholding tax at the rate of 15.315% through December 31, 2037 when paid to nonresident individuals and foreign corporations; provided that 20.42% withholding tax applies to an individual shareholder who holds 3% or more of the total issued shares. No exemption from or reduction will apply under Japanese domestic tax law to withholding tax on dividends.
If the nonresident individuals and foreign corporations have no permanent establishment in Japan, the Japanese taxation is finalized only by the withholding tax. The domestic law withholding tax rates as well as the source rules of income mentioned above may be modified by an applicable tax treaty. In particular, some tax treaties, e.g., that with the United States, totally exempt Japanese withholding tax on certain intercompany dividends and royalties paid to certain U.S. qualified residents, subject to limitation on benefits and other conditions being met. The tax treaty with the United Kingdom totally exempt Japanese withholding tax on interest, certain intercompany dividends and royalties paid to certain U.K. qualified residents, subject to limitation on benefits and other conditions being met.
Yes. Most U.S. source income, except for capital gains, that is paid to a foreign person is subject to a 30 percent withholding tax. The withholding rate may be reduced or eliminated by a tax treaty. Further, the disposition of a U.S. real property interest by a foreign person is generally subject to FIRPTA withholding of 15 percent. Withholding may also apply at a 30 percent rate under FATCA for non-compliant entities.
Payments to a non-resident for the use or right to use in Hong Kong various types of intellectual properties (i.e. patent, design, trademark, copyright material, secret process or formula or other property of a similar nature) are subject to withholding tax. For companies, generally the rate is 4.95% but it can increase to 16.5% where the payments are made to a non-resident associated company for the use or right to use in Hong Kong intellectual property that was, at any time, partly or wholly owned by a person carrying on business in Hong Kong.
Yes. Withholding taxes are applicable on any income obtained by non-Spanish residents, individuals or entities (essentially, dividends, interest and royalties), the general rate being 19% in the absence of a Double Tax Treaty.
In addition, certain exemptions are applicable, such as the exemption on interest income obtained by EU residents or the exemption on dividends based on the Parent-Subsidiary Directive.
Dividends paid to another Austrian company are exempt from withholding tax. Dividends paid to a non-resident company are subject to a 27.5% withholding tax (increased from 25% as from 1 January 2016) unless the rate is reduced under a domestic provision or a tax treaty or the dividends are exempt under the EU parent-subsidiary directive. A refund of the withholding tax is possible for EU/EEA parent companies if the withholding tax cannot be credited in their country of residence under a tax treaty.
Germany levies a variety of withholding taxes. In a business environment the most prominent ones are withholding tax on royalties paid to non-resident taxpayers(rate 15% plus solidarity surcharge), dividend withholding tax (rate 25% plus solidarity surcharge) and withholding tax on construction services rendered in Germany (15% plus solidarity surcharge). Generally speaking, the aforementioned withholding taxes have to be withheld by the German remuneration debtor, even if a double tax treaty or a European directive provides for relief from the tax, unless a withholding tax exemption certificate has been obtained by the time the relevant payment is made.
The German limitation of benefits provision, which restricts the availability of treaty or directive relief from withholding taxes, has repeatedly been challenged as being in violation of EU law. In July 2016, a local tax court escalated a former version of the German limitation of benefits provision to the European Court of Justice.
Companies are subject to three different types of withholding taxes: on professional income; on real estate and on income from movable property.
- The withholding tax on professional income must be withheld on any wage (as broadly defined by the Income Tax Code, see point 10(b) above) attributed by the employer and paid to the tax administration. In some cases, the employer is entitled to a partial exemption of payment. The part of the withholding tax that is deducted but not paid to the tax administration remains at the employer’s disposal. As a result, this mechanism works as a wage subsidy to the employer. Some important exemptions apply e.g. for research workers, for new jobs created in some well-defined area and for start-up companies.
- The withholding tax on real estate is not an advance payment to final tax but is a Regional tax, independent from the income tax. The taxable basis is the indexed ‘cadastral income’ (see above). The Regions are competent to determine the basic rate and exemptions. The basic rate is increased by the provincial and municipal surcharges. The withholding tax on real estate is a deductible expense for corporate taxpayers.
- The withholding tax on income from movable property, i.e. dividends, interest and royalties. As a general rule, (Belgian) withholding tax is creditable against the recipient’s corporate income tax liability. Belgium changed the withholding tax rules to comply with the Court of Justice of the European Union’s (‘CJEU’) Santander case law.
An Italian company or branch must levy withholding tax on the following payments:
- salaries and wages paid to employees;
- remuneration paid to individuals for professional services or other activities of an independent nature; and
- returns on capital paid to individuals or foreign companies not having a branch in Italy (subject to certain exceptions).
Accordingly, a Withholding Tax Agent Return must be filed annually, showing the various types of payments and the related withholding tax levied for the previous year.
Salaries are subject to withholding tax at individual income tax progressive rates, remunerations paid to individual for professional services and the like are subject to a fixed 20% withholding tax on the gross amount paid, savings income are subject to a flat withholding tax of 26% (save for limited exception, see reply 10).
In the past the EU Commission challenged the withholding tax regime applicable to dividends payable to EU holding companies and the Italian government aligned the domestic legislation to the EU principles.
Malaysia has a number of withholding tax provisions, whereby among others the following payments to a non-resident attract withholding tax:
- Consideration for services rendered by the non-resident person or his employee in connection with:
(i) the use of property or rights belonging to him, or
(ii) the installation or operation of any plant, machinery or other apparatus purchased from him;
- Consideration for technical advice, assistance or services rendered in connection with technical management or administration of any scientific, industrial or commercial undertaking, venture, scheme;
- Rent or other payments made under any agreement or arrangement to a non-resident person for the use of any moveable property;
- Contract payment to a non-resident contractor in respect of services under a contract. Services under a contract in relation to any non-resident contractor, means the performing or rendering of any work or professional service in Malaysia, being work or professional service in connection with, or in relation to, any contract project.
There is no withholding tax on dividend payments in Malaysia.
Yes Ireland operates withholding taxes on a variety of categories of payments. In particular, Ireland operates withholding taxes on interest, dividends, patent royalties and relevant contracts withholdings (i.e. construction contracts).
Ireland usually operates an exemption system for such payments to a recipient who is resident for tax purposes in an EU Member State or a country with which Ireland has a double tax treaty. It is unlikely that the system will be challenged under EU law as it is not sector specific but part of a general regime.
Dividends paid to a non-resident company are subject to a 30% withholding tax on the gross amount paid, unless provided otherwise by relevant tax treaties. If the dividends are paid to a company located in a non-cooperative jurisdiction, the rate is increased to 75%. As of April 8th, 2016, seven countries are considered non cooperative countries by French authorities: Botswana, Brunei, Guatemala, Marshall Islands, Nauru, Niue and Panama.
According to the EU Parent-Subsidiary Directive (2011/196), transposed into article 119 ter of the FTC, dividends paid by a French company to its parent located in another EU Member State are, under certain conditions, withholding tax exempted.
Interest paid to a non-resident company is generally not subject to any withholding tax, unless the payment is made to an entity located in a non-cooperative jurisdiction. If so, the 75% rate will also apply to the gross amount.
Royalties paid to a non-resident company are subject to a 33.1/3% withholding tax on the gross amount paid.
According to the EU Interest and Royalties Directive (2003/49/CE), transposed into article 119 quater of the FTC regarding interest and article 182 bis of the FTC regarding royalties, interests and royalties paid by a French company to its parent located in another EU Member State are, under certain conditions, withholding tax exempted.
Australia does operate withholding taxes. The main forms of withholding apply to offshore distributions of dividends, interest and royalties. In 2016 a foreign capital gains withholding tax was introduced for all acquisitions of taxable Australian real property exceeding AUD 2 million.
Yes, Switzerland levies a withholding tax at a rate of currently 35% on dividends paid by Swiss resident companies. Swiss sourced interest payments on specific debt instruments, i.e. bonds and similar instruments such as serial mortgage notes, serial promissory notes, deposit certificates, commercial papers, money market papers are subject to Swiss withholding tax at a rate of 35%. The same applies for interest paid on savings accounts of Banks resident or domiciled in Switzerland. No Swiss withholding tax applies on interest paid on ordinary loan relationships.
Furthermore, the creditor of a loan which is secured by a mortgage pledge may be liable for Swiss federal and cantonal corporate income tax on interest received if the respective property is located in Switzerland. In such case the (Swiss) debtor would be required to withhold the federal and cantonal corporate income tax due and remit the amount to the competent Swiss tax authorities.