Can I avoid double taxation of dividends?
April 30, 2022 | 120,00 EUR | answered by Guido Hoffmann
Dear tax advisor,
my name is Gabriele Reuter and I have a question regarding the double taxation of dividends. I have been an active investor for several years and have invested in various stocks from which I regularly receive dividends. However, I have recently discovered that these dividends are being taxed in both the country where the company is based and in my country of residence. This results in double taxation, significantly reducing my returns.
I am concerned that this double taxation is affecting my yield and I am wondering if there are ways to avoid it. Are there specific tax regulations or agreements between countries that could help me avoid double taxation? Or are there other strategies I could use to reduce my tax burden?
I would greatly appreciate your expertise and advice on this matter, as I would like to optimize my tax burden and increase my returns. Thank you in advance for your help and support.
Kind regards,
Gabriele Reuter
Dear Mrs. Reuter,
Thank you for your inquiry regarding the double taxation of dividends. It is understandable that you are concerned, as this can significantly impact your returns as an investor. Indeed, double taxation of dividends can lead to an unwanted tax burden, as profits are taxed in both the company's country and the investor's country of residence.
However, there are ways to avoid or at least reduce double taxation of dividends. A common method to avoid double taxation is through the so-called Double Taxation Agreements (DTAs) between the countries involved. These agreements regulate how income, such as dividends, should be taxed between countries to avoid double taxation. Through DTAs, you can usually claim a credit for taxes paid abroad against your local tax liability.
It is important for you to familiarize yourself with the existing DTAs between your country of residence and the countries where the companies are located. You can obtain more information on the applicable DTAs on the website of the Federal Central Tax Office or through consultation with a tax advisor to see if you are eligible for any tax relief.
Additionally, other tax strategies can be applied to reduce double taxation. These include utilizing tax exemptions, utilizing loss offsetting opportunities, or choosing a tax-optimized investment portfolio.
I strongly recommend that you consult with an experienced tax advisor to analyze your individual situation and develop suitable measures to optimize your tax burden. A professional tax advisor can help you find the best solution for your tax concerns and increase your returns.
I hope this information is helpful to you and I am available for any further questions. Thank you for your trust and I wish you success in optimizing your tax situation.
Sincerely,
Guido Hoffmann
