Are there any withholding taxes?

Tax (4th edition)

Angola Small Flag Angola

Yes, Angola has several withholding taxes on different types of income: services, dividends, interest, rentals, capital gains, royalties.

Brazil Small Flag Brazil

Yes, several taxes of the Brazilian tax system in certain occasions are subject to be withheld, especially the Income Tax (please refer to question 13).

Canada Small Flag Canada

A summary of the withholding rates for different countries can be found in the table below.

Country

Interest

Dividends

Royalties

Annuities

Australia

10

5/15

10

15/25

China

10

10/15

10

25

France

10

5/15

0/10

25

Germany

10

5/15

0/10

15/25

Hong Kong

10

5/15

10

25

Israel

10

5/15

0/10

15/25

Italy

10

5/15

0/5/10

15/25

Japan

10

5/15

10

25

Mexico

10

5/15

0/10

15/25

Switzerland

10

5/15

0/10

15/25

United Kingdom

10

5/15

0/10

0/10/25

United States

0

5/15

0/10

15/25

Colombia Small Flag Colombia

At a national level, there are Income Tax, Value Added Tax, Stamp Tax and Debit Tax withholdings. At a subnational level, there are Industry and Commerce Tax withholdings.

Cyprus Small Flag Cyprus

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%; royalties payments made to nonresidents 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.

Germany Small Flag Germany

Germany levies withholding taxes.

There is a withholding tax on dividends distributed at tax rate of 25 % plus solidarity surcharge, withholding tax on construction services performed in Germany at a rate of 15% plus solidarity surcharge and withholding taxes on royalties paid to non-resident taxpayers at a tax rate of 15 % plus solidarity surcharge.

Unless a certificate of withholding tax exemption has been obtained, the German debtor of the remuneration has to withhold. Due to the German unilateral limitation on benefits provisions, this applies even if a double tax treaty or an EU directive provides for relief from the withholding tax unless further requirements are met.

Gibraltar Small Flag Gibraltar

Except in the cases of payments to subcontractors in the construction industry and payments to employees under the PAYE system, there are no withholding taxes in Gibraltar.

Greece Small Flag Greece

There is a system of withholding taxes in Greece, the most notable of which are briefly described below.

Interest, dividends and royalties are subject to 15%, 10% and 20% withholding tax respectively. The said rate on dividends in particular applies with respect to dividends declared as of the fiscal year 2019 onwards. These rates exhaust the tax liability of individuals and non-resident persons. Withholding tax rates on interest, dividends and royalties can be reduced or eliminated if payments are made to beneficiaries in double tax treaty jurisdictions. Profits, interest and royalties distributed to qualifying EU parent companies are exempt from any withholding tax, provided that the conditions of the Parent-Subsidiary Directive are met.

Service fees are subject to a 20% withholding tax when paid to permanent establishments established in Greece by companies established outside the EU. Payments to certain contractors are subject to 3% withholding tax.

Salaries and pensions are also subject to withholding tax based on the gradual scale applicable to individuals.

India Small Flag India

Yes, India has comprehensive withholding tax regime, wherein specified payments (viz. professional fees, technical services fees, commission, contractual payments, etc.) to residents are subject to withholding of tax by the payer. However, for payments to non-residents, withholding of tax is required where such payments are chargeable to tax in India irrespective of whether the payer is a resident or non-resident of India.

Ireland Small Flag Ireland

In general Ireland applies a 20% withholding tax to dividends, interest and patent royalties. The withholding tax is typically removed under domestic law, the EU Parent/Subsidiary directive or a DTA.

The primary domestic exemption for interest withholding tax applies for interest paid to a company resident in an EU or DTA partner jurisdiction.

The primary domestic exemption for royalty withholding tax applies to royalties paid to a company in the EU or DTA partner jurisdiction in the ordinary course of a trade; or paid in respect of non-Irish patents (subject to certain conditions being satisfied and application to Irish Revenue).

Subject to appropriate declarations being in place, the primary domestic exemptions for dividend withholding tax applies to (i) individual resident in EU/DTA country; (ii) company resident in EU/DTA country and not under the control, (directly or indirectly) of an Irish resident; (iii) company under the control (directly or indirectly) of person(s) who are tax resident in an EU/DTA country (and not under the control of persons resident outside an EU/DTA country); (iv) company whose principal class of shares is substantially and regularly traded on a recognised stock exchange in an EU/DTA country; (v) company which is a 75% direct or indirect subsidiary of another company whose principal class of shares is substantially and regularly traded on a recognised stock exchange in an EU/DTA country.

Israel Small Flag Israel

Israel maintains a broad withholding system applicable to both domestic and outbound payments.

For example, Interest payments to corporate entities are generally subject to withholding tax at the standard corporate tax rate level (currently 23%) unless a withholding certificate providing for a lower rate (or exemption) is provided. Payments to non-Israeli residents may be eligible for reduced rates of withholding under a tax treaty.

For withholding from dividend payments, please refer to question 22 below.

Other payments to non-Israeli companies (such as capital gains derived from the sale of an asset located in Israel) are generally subject to the standard corporate tax rate, collected via withholding. Certain exemptions with respect to the sale of securities may be applicable under domestic law or a tax treaty.

Italy Small Flag Italy

Italy levies withholding taxes (WHT) on the following outbound payments:

  • Dividends: dividends paid to non-resident companies are usually subject to a 26% WHT which may be reduced by the applicable double tax treaty. Dividends paid to companies resident of an EU or EEA member State are subject to a 1.2% WHT. A WHT exemption may be obtained where the Parent Subsidiary Directive applies;
  • Interest: interest payments made to non-resident companies are usually subject to a 26% WHT that may be reduced by the applicable double tax treaty. Some exemption from WHT are provided for certain interest payments received by non resident companies. For example: (i) no WHT is levied on interest from certain bonds paid to persons tax resident of jurisdictions with an effective exchange of information with Italy; (ii) no WHT is levied on interest from Italian current accounts; (iii) no WHT is levied on interest payments made in relation to long-term (more than 18 months) loan arrangements granted by certain companies or entities. A WHT exemption may be obtained where the Royalties Directive applies;
  • Royalties: royalties paid by Italian companies or individuals to nonresident beneficiaries are usually subject to a withholding tax rate of 22.5% (i.e.: 30% of 75% of gross royalties) which may be reduced by the applicable double tax treaty. A WHT exemption may be obtained where the Royalties Directive applies.

Austria Small Flag Austria

Apart from wage withholding tax at the progressive income tax rate, dividends paid to non-resident companies are, in general, subject to a withholding tax. Dividend withholding tax amounts to 27.5% (25% if paid to a corporate shareholder), unless a reduced rate applies under a tax treaty. Dividends falling under the scope of the EU Parent-Subsidiary Directive (company form listed in the Directive; at least 10% shareholding, retention period of one year) are exempt from any withholding tax, if the EU parent company has an active business and sufficient substance; otherwise a refund procedure can be operated with the Austrian tax authority.

Royalties paid to non-resident companies are subject to a withholding tax of 20%, unless a reduced rate applies under a tax treaty or are exempt from any withholding taxes pursuant to the EU Interest and Royalties Directive. Loan interest payments to non-resident companies are currently not subject to WHT as long as the loan is not secured with domestic real estate. Interest on bank deposit or certain publicly issued corporate bonds may trigger Austrian withholding tax (25%/27.5%), if an Austrian paying agent or custodian is involved.

WHT of 20% has also to be levied on fees for technical or commercial advisory services, unless the rate is reduced or the payments are exempt under an applicable tax treaty.

As of 1 January 2019 a special withholding tax applies on income derived from the letting of rights on land to infrastructural enterprises in connection with transmission of energy or use of cables below or above the surface in the public interest (e.g. electricity, gas, oil or heating), which amounts to 10% in case of individuals and 8.25% in case of corporations.

Japan Small Flag Japan

Yes. However, the types of payments that are subject to the withholding tax are different depending on whether such payments are made to residents or non-residents.

Resident individuals and corporations will be subject to the withholding tax only on limited types of payments, such as interest on bonds and dividends. Resident individuals will be also subject to the withholding tax on payments such as salary and certain types of remuneration.

Non-resident individuals and corporations will be subject to withholding tax on broader types of income (e.g. royalties from intellectual property, interest on loans, rent fees for real property) sourced in Japan, unless exempted under the applicable tax treaty.

Luxembourg Small Flag Luxembourg

Dividends paid to residents as well as non-residents are in principle subject to a 15% withholding tax (“WHT”) in Luxembourg. It is possible, however, to benefit either from a reduced rate or an exemption under a double tax treaty or from the domestic participation exemption regime.

Domestic participation exemption is granted if, at the time of the dividend distribution:

  • the parent company is a Luxembourg fully taxable company, or a resident company of a Member State of the EU as defined in Article 2 of the PSD, or a Swiss resident capital company that is subject to an income tax in Switzerland without being exempt from tax, or a foreign joint-stock company which is subject in its country of residence to an income tax regime corresponding to the Luxembourg CIT;
  • said company holds or commits to hold a participation of at least 10% (or with an acquisition price of at least EUR 1.2 million) in the nominal share capital of the distributing company; and
  • such qualifying participation has been held for an uninterrupted period of at least 12 months.

If the shareholder is an EU company within the scope of the PSD, the exemption applies subject to the additional specific GAAR below:

  • the EU parent company is not used for the main purpose or as one of the main purposes of obtaining a tax advantage that defeats the object of the PSD.

Liquidation proceeds are not subject to dividend WHT. If properly structured a partial liquidation may as well not be subject to the WHT. In addition dividend payments made by certain type of vehicles, e.g. SPFs, SICAV, SICAR and securitisation vehicles are not subject to WHT.

There has been no WHT on royalties in Luxembourg since 1 January 2004. Furthermore, there is no WHT on arm’s length interest payments in Luxembourg. Interest paid under certain hybrid instruments or not at arm’s length may be subject to a 15% WHT if reclassified as dividend payments by the tax authorities.

Malaysia Small Flag Malaysia

Yes. Subject to the non-resident country in question and whether there are DTAs, withholding tax is imposed on payments made to non-residents for:

(a) Contract payments;

(b) Interest;

(c) Royalty;

(d) Non-resident public entertainers in respect of services performed or rendered in Malaysia;

(e) Special classes of income deemed to be derived from Malaysia (services rendered in connection with the use of property or rights belonging to, or the installation or operation of any plant, machinery or other apparatus purchased from the non-resident; advice, assistance or services rendered in connection with the management or administration of any scientific, industrial or commercial undertaking, venture, project or scheme; or rent or other payments made under any agreement or arrangement for the use of any moveable property);

(f) Interest paid by approved institutions (e.g.: , banks, Islamic banks, co-operative societies);

(g) Income of certain unit trusts;

(h) Profits distributed or credited out of family fund, family re-takaful fund or certain general funds; and

(i) Where the payer is liable to make payments to the non-resident for gains or profits falling under Section 4(f) of the ITA derived from Malaysia.

Mexico Small Flag Mexico

Generally speaking, under certain circumstances taxpayers can be subject to income and value added tax withholdings. For instance, the Income Tax Law provides that employers ought to withhold income taxes due on their employees’ wage. 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:

(i) financial institutions that receive payments in kind or obtain goods by judicial or fiduciary allocation or awarding;

(ii) 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;

(iii) individuals or legal entities that acquire, temporarily use, sell or lease to foreign tax residents without permanent establishments, tangible assets.

The Netherlands Small Flag The Netherlands

The Netherlands has a withholding tax on outbound dividends, levied at a rate of 15%.

The Netherlands does not currently levy withholding tax on outbound interest and royalty payments. However, it is expected that a legislative proposal, proposing a conditional withholding tax on outbound interest and royalty payments made to so-called 'low tax jurisdictions' and in certain abusive situations (e.g. intermediate companies without substance, interposed between the Netherlands and a low tax jurisdiction), will be published in September 2019. If the legislature adopts the legislation, the expected effective date of this conditional withholding tax is January 1, 2021. The jurisdictions the Netherlands currently considers as low tax are listed under question 9.

Peru Small Flag Peru

Yes. Withholding taxes currently apply on payments of Peruvian-source income to non-residents, as follows:

Payment

WHT on individuals

WHT on entities

Royalties

30%

30%

Lease (other than lease of planes and vessels)

5%

30% (24% in case of goods subject to depreciation)

Interest

4.99% or 30%

4.99% or 30%

Interest from bonds and other financial income

4.99%

4.99%

Technical assistance

24%

15% or 30%

Capital gains derived from sale of stock

0%/5%/30%

0%/5%/30%

Capital gains derived from sale of real estate

5%

30%

Lease of vessels and planes

18%/24%

8%/10%

Insurance and reinsurance

2.1%

2.1%

Air transport

0.3%

0.3%

Maritime transport

0.6%

0.6%

Telecom services

1.5%

1.5%

Digital services

30%

30%

Artists

15%

15%

International News Agencies

3%

3%

Demurrage

24%

24%

Distribution of movies

6%

6%

Lease of containers for international transport

4.5%

4.5%

Payments for TV rights

6%

6%

Business income

30%

30%

Note that the double tax conventions entered into by Peru may provide for different WHT rates.

Philippines Small Flag Philippines

Yes, the Philippines tax system has final and creditable withholding taxes. The rates vary depending on the nature of the income payment and the recipient.

Poland Small Flag Poland

Withholding tax applies to income disbursed in Poland resulting from share in the profits of legal entities - dividends, interest, license fees and remuneration for some intangible services.

  • dividends

As a rule, the rate of withholding tax on dividends is 19 per cent, but double tax treaties may stipulate a lower rate (5, 10 or 15 per cent). A WHT exemption may be obtained where the Parent Subsidiary Directive applies (more details provided in answer to question 22).

  • interest

As a rule, the rate of withholding tax on interest is 20 per cent, but double tax treaties may stipulate a lower rate (5, 10 or 15 per cent). Some double tax treaties also stipulate a 0 cent rate on interest (e.g. those with Sweden, the United States or France). A WHT exemption may be obtained where The Interest and Royalties Directive (“IRD”) applies. The following requirements must be met:

a. the company disbursing the interest holds a minimum of 25 per cent of the shares in the capital of the company collecting the interest; or

b. the company collecting the interest holds a minimum of 25 per cent of the shares in the capital of the company disbursing the interest/license fees; or

c. the company subject to taxation on its total income in an EU/EEA state holds at least 25 per cent of the shares in the capital of the disbursing company and in the capital of the company collecting the interest; and

d. a minimum 25 per cent share has been held directly and continuously for at least two years - this requirement does not need to be met at the time of the disbursement of the above interest.

The application of exemption is depends on whether the Polish company has the recipient’s tax residency certificate and a statement that the recipient or the company referred to in c) is subject to CIT on its total income in its country of residence, regardless of where the income is earned, and is not taking advantage of an exemption from CIT on its total income regardless of source.

  • royalties

As a rule, the rate of withholding tax on interest is 20 per cent, but double tax treaties may stipulate a lower rate (5, 10 or 15 per cent). No tax is withheld if the abovementioned conditions for the application of the IRD are met.

  • intangible services (such as advisory services, advertising, data processing, etc.)

Payments for intangible services, such as advisory services, advertising, data processing, etc. are subject to 20 per cent withholding tax unless otherwise stated by double tax treaties (treaties concluded between Poland as a rule do not provide for WHT on payments for intangible services).

The 20 per cent withholding tax exemption in Poland is conditional upon the disbursing entity holding the recipient’s tax residency certificate.

With the beginning of January 2020 the new WHT regime introduced in 2019 will effectively enter into force. Under the previous regime the exemptions or reduced WHT rates could be automatically applied basing on double tax treaties or EU Directives. According to the new rules, the tax remitter is obliged to withhold the tax unless:

a. the payments do not exceed threshold of PLN 2M per taxpayer per year, or

b. the tax remitter has submitted a statement under penal fiscal liability, or

c. an opinion has been obtained from the Minister of Finance.

The tax remitter submits a statement that it has conducted a verification procedure and it confirmed that the conditions for the preferential tax rates are met (e.g. beneficial owner status, conducting actual economic activity by the payment receiver etc.).

In the verification process the tax remitter must take due diligence and collect documents confirming the right to use preferential tax rates. The tax remitter’s statement is submitted under the threat of penal fiscal liability and potential tax sanction amounting to 10% - 20% of the WHT.

In case the PLN 2M threshold is exceeded and neither the statement or the opinion are provided the withheld tax may be refunded in refund proceedings: the application should be accompanied by a statement submitted under penal fiscal liability confirming beneficial ownership status, performance of genuine business activity and satisfaction of remaining eligibility criteria for CIT exemption / reduced rate the tax authorities may conduct a tax audit or request information from the tax jurisdiction of the beneficial owner the refund should be made within 6 months but this term may be extended.

Portugal Small Flag Portugal

Personal Income Tax Code and Corporate Income Tax Code present specific withholding tax applicable over certain type of income (e.g. interest, dividends, royalties) with source in Portugal. As a rule, such withholding taxes are usually definitive on payments to non-resident entities and individuals, and merely on account of the final tax due on payments to resident entities and individuals.

South Africa Small Flag South Africa

There are withholding taxes on royalties, interest and dividends. There is also a withholding tax on payments to non-resident sellers of immovable property.

Withholding tax on royalties is due on any royalty payment paid to a foreign person or paid for the benefit of a foreign person from a source within South Africa. Although the foreign person is liable for the tax, the person paying the royalty must withhold the tax, as agent, from the payment to the foreign person. Withholding tax on royalties is currently levied at a rate of 15%. A reduced rate of tax or exemption may apply under an applicable agreement for the avoidance of double taxation in place between South Africa and a foreign country. The relevant "Withholding Tax On Royalties" declaration must be completed by the foreign person and submitted by the party paying the royalty prior to the payment of the royalty before the reduced rate can be applied.

Withholding tax on interest is charged on interest, from a source within South Africa, paid by any person to or for the benefit of a foreign person as is currently levied at a rate of 15%. A reduced rate of tax or exemption may apply under an applicable agreement for the avoidance of double taxation in place between South Africa and a foreign country. The relevant "Withholding Tax On Interest" declaration must be submitted by the party paying the interest prior to the payment of the interest before the reduced rate can be applied.
Dividends tax is a tax on shareholders (i.e. the beneficial owners) of shares when dividends are paid to them. Generally, dividends tax is withheld from dividend payments by a withholding agent (i.e. either the company paying the dividend or a regulated intermediary).
Dividends tax is currently levied at a rate of 20%. A reduced rate of tax or exemption may apply under an applicable agreement for the avoidance of double taxation in place between South Africa and a foreign country. The relevant declarations must be completed by the foreign shareholder and submitted via the withholding agent prior to the payment of the dividend before the reduced rate can be applied.

Purchasers of immovable property in South Africa, which is disposed of by a non-resident for an amount in excess of R2 million, must withhold and pay over to SARS an amount of tax. The amount to be withheld depends on the nature of the non-resident person disposing of the immovable property. Where the non-resident seller is:

  • a natural person, the amount to be withheld is 7.5%;
  • a company, the amount to be withheld is 10%; and
  • a trust, the amount to be withheld is 15%.

A non-resident seller of immovable property situated in South Africa may apply to SARS for a directive that no amount or a reduced amount should be withheld by the purchaser from the purchase price. The amount withheld must be paid to SARS within 14 business days where the purchaser is a resident and 28 days where the purchaser is a non-resident.

The amount withheld from any payment to the non-resident seller is an advance payment of that non-resident seller's liability for normal tax for the year of assessment when that immovable property is disposed of.

Spain Small Flag Spain

i. Withholding on outward-bound payments (domestic law)

Provided that a double tax treaty (DTT) is applicable, the terms of such DTT should be observed. In case there is no applicable DTT or a limit of taxation is not envisaged in the relevant DTT, payments made by a Spanish taxpayer to a non-resident entity will subject to withholding tax in Spain at the following general rates:

  • General rate is 24%, except for 19% for tax residents in the EU and EEA.
  • 19% on dividends and interest.
  • 19% on royalties paid to residents in the UE, Iceland and Norway, and 24% in the rest of the cases.
  • 19% on capital gains.

For the application of a reduced rate or one of the exemptions described below, the tax payer must be in possession of a tax residence certificate issued by the Tax Authorities of the country of the recipient.

ii. Domestic law exclusions or exemptions from withholding on outward-bound payments

Dividends

According to the domestic law, dividends paid by a subsidiary to its EU parent company are exempt from withholdings when:

a The parent company holds at least a minimum holding of 5% in the Spanish subsidiary (or alternatively, the acquisition cost of exceeds EUR 20 million) and the interest in the Spanish subsidiary has been held for at least one year before the dividends distribution (or will be held up to completing the one-year period).

b Both the entity paying the dividends and the beneficial owner are subject and not exempt from one of the corporate taxes mentioned in Article 2.c) of the Council Directive 2011/96/EU of 30 June 2011 on the common system of taxation applicable in the case of parent companies and subsidiaries of different Member States.

c The payment is not the consequence of the liquidation of the subsidiary.

d Both the entity paying the dividends and the beneficial owner have one of the legal forms, listed in the Annexes to the Council Directive 2011/96/EU of 30 June 2011 on the common system of taxation applicable in the case of parent companies and subsidiaries of different Member States.

This exemption will not be applicable in case the majority of voting rights of the receiving entity is directly or indirectly owned by non-residents in the EU, unless it is proven that the incorporation of the receiving entity is due to valid economic reasons and sound business reasons.

Interest

Interest paid to a resident in the EU will be exempt of withholding.

This exemption does not apply when the recipient is tax resident in a tax haven.

Capital gains

Capital gains from alienation of movable goods (including shares) by tax residents in the EU are exempt from withholding, except in the following cases:

a The transferred shares are issued by a Spanish company whose main asset or assets are (directly or indirectly) assets immovable located in the Spanish territory.

b The non-resident selling the company is a private individual that has held (directly or indirectly) at least a 25% holding in the Spanish company in any moment during the twelve months previous to the transfer.

c When the transferor is a non-resident entity, the exemption will only apply if the domestic participation exemption requirements (above described), are fulfilled. This requirement aims to equalize the treatment of both residents and non-residents.

Royalties

Royalties paid to an EU Member State would be exempt from withholding when the following requirements are met:

a Both the entity paying royalties and the beneficial owner have one of the legal forms, listed in the Annexes to the Council Directive 2003/49/EC of 3 June 2003.

b Both the entity paying royalties and the beneficial owner are subject and not exempt from one of the corporate taxes mentioned in Article 3.a).iii) to the Council Directive 2003/49/EC of 3 June 2003.

c Both entities are resident in the EU and none of them is resident in a third country in accordance with a Double Taxation Agreement.

d Both entities are associated companies, this is: (a) one has a direct minimum holding of 25 % in the capital of the other, or (b) a third company has a direct minimum holding of 25 % in the capital of both entities. This holding should be held for a minimum holding period of one year that could be completed after the payment.

e The entity that receives those royalties should receive them for its own benefit and not as an intermediary, such as an agent, trustee or authorized signatory, for some other person and, in case the recipient is a PE, the received royalties should effectively be connected with that PE activity and it should be a taxable income for the PE.

This exemption over royalties will not apply in case the majority of voting rights of the receiving entity is directly or indirectly owned by a non-resident in the EU unless it is proven that the incorporation of the receiving entity is due to valid economic reasons and sound business reasons.

iii. Double Tax treaties

Currently, Spain has entered into double taxation treaties with more than 90 countries, the main aim of which is to eliminate double taxation and provide for reduced rates of withholding taxes of dividends, interests and royalties. Double taxation treaties concluded by Spain are generally compliant with the provisions set forth by the OECD.

A certificate stating that the taxpayer is a resident in another contracting state is required for a non-resident to benefit from the provisions of a treaty. Certificates of residence are valid for one-year term.

Switzerland Small Flag Switzerland

Switzerland levies withholding tax, at a rate of currently 35%, on profit distributions made 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 and money market papers, are also subject to withholding tax at a rate of 35%. The same applies for interest paid on savings accounts of banks resident or domiciled in Switzerland. No withholding tax applies to interest paid on ordinary loans.

Furthermore, the creditor of a loan which is secured by a mortgage pledge may be liable for Swiss federal and cantonal income tax on interests received if the property in question is located in Switzerland. In such cases, the Swiss debtor would be required to withhold the federal and cantonal income tax due and remit the amount to the competent Swiss tax authorities.

Swiss-resident recipients can normally obtain a full refund of withholding tax, whereas a non-resident recipient may apply for a full or partial refund of dividend only if the provisions of an applicable tax treaty so provide. Otherwise, the tax is considered as final.

United States Small Flag United States

Yes. In general, non-US persons are subject to US tax only with respect to income from US sources. US source income that is “fixed or determinable annual or periodical gains, profits, and income” (FDAP) and that is not effectively connected with a US trade or business is generally subject to a 30 percent gross basis withholding tax, which is withheld at the source by the payor or the payor’s withholding agent.

FDAP includes, for example, dividends, interest, royalties, and rents. FDAP income generally does not include gain from the sale of property, however, certain gains from sales of U.S. real property interests are subject to tax as effectively connected income (or in some instances as dividend income) and subject to withholding of 15 percent on a gross basis.

Many types of income are either exempt from tax (e.g., portfolio interest) or subject to a reduced rate of tax under an applicable income tax treaty. To the extent that the withholding agent deducts and withholds an amount, the withheld tax is credited to the recipient of the income. If the agent withholds more than is required, and results in an overpayment of tax, the excess may be refunded to the recipient of the income upon filing of a timely claim for refund.

Finally, certain foreign financial institutions and other noncompliant entities may be subject to a 30 percent withholding tax under FATCA.

Zambia Small Flag Zambia

Yes. There is withholding tax on management fees, consultancy fees, royalties, interest and dividends.

United Kingdom Small Flag United Kingdom

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, or the interest is considered to be short interest rather than yearly interest.

In Coal Staff Superannuation Scheme Trustees Limited v Commissioners for Her Majesty's Revenue & Customs [2018] UKUT 152 (TCC); [2018] STC 1095, the Upper Tribunal held that EU law did not permit 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 Upper Tribunal, this regime breached Art. 63 TFEU. The decision is under appeal.

Belgium Small Flag Belgium

Companies fall under the obligation to withhold a payroll tax on remuneration and pensions paid to both resident and non-resident employees and directors. There are partial exemptions of payroll tax available for the employer in certain circumstances. Payroll tax is deductible in the hands of the employer.

Withholding taxes are levied on income stemming from movable property, such as dividends, interest or royalties. Such withholding tax may be offset by the recipient of the income against its corporate income tax, provided that certain conditions are met,

Panama Small Flag Panama

Payments made to beneficiaries not resident in the Republic of Panama are subject to withholding tax, on 50% of the amount invoiced, at the applicable corporate income tax rate 25%. WHT will apply when the payment relates to services rendered in and abroad Panama, interest and income from intellectual property rights, royalties, know-how and alike.

No WHT will apply on service, royalty o know how payments, if the local entity considers that the expense incurred is not deductible for tax purposes, or if the foreign entity obtains a Panamanian taxpayer identification number and directly pays the tax.

Dividends – Dividends paid to a non-resident on nominal shares are subject to a 5% or 10% withholding tax, depending on the source of the dividends; the rate is 20% for bearer shares.

Interest – Interest paid to a non-resident is subject to a 12.5% (50% of the interest is subject to the general 25% corporate tax rate) withholding tax.

Royalties – Royalty payments made to a non-resident are subject to a 12.5% (50% of the general 25% rate) withholding tax if the payments benefit a Panamanian resident or if the expense has been deducted in Panama.

Service fees – Services paid to a non-resident are subject to a 12.5% withholding tax (50% of the general 25% rate).

Branch remittance tax – A branch of a foreign corporation must pay 10% of its after-tax income as a dividend tax in addition to the corporate income tax.

Updated: October 9, 2019