Will they? On every dividend? Have you confirmed this?Let's assume I buy through Fidelity an Ireland-domiciled ETF with US holdings. If my understanding of the above is correct, the dividends I would get from the US holdings contained in an Ireland-domiciled ETF are already net of the 15% US withholding tax. But then, since I'm a NRA with a US Fidelity account, Fidelity will apply a flat 30% tax on the dividends I get (what they call "Non Resident Tax").
Fidelity should only apply 30% US tax withholding on dividends from any US domiciled funds and ETFs (and any directly held US stocks). They should not withhold it on any non-US holdings. If they do, they are doing something wrong, at which point you can either prompt them to do it right, or (worst case) file a form 1040-NR to recover the over-withholding.
See: Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities (Internal Revenue Service)
An Ireland domiciled ETF is unequivocally a "foreign corporation". The reference to "Income Code 8" indicates how this income will appear on a year end Form 1042-S.Dividends paid by foreign corporations (Income Code 8). Dividends paid by a foreign corporation generally are not subject to chapter 3 withholding and are not withholdable payments. This exception does not require a Form W-8. However, a Form W-8 may be required for purposes of Form 1099 reporting and backup withholding.
For avoidance of doubt, Ireland does not tax dividends paid by Ireland domiciled ETFs to non-Irish residents. Nor does it have any type of withholding tax for this case. You should receive the full dividends paid by Ireland domiciled ETFs, with no further tax payable or withheld, either to the US or to Ireland.
Statistics: Posted by TedSwippet — Fri Jun 14, 2024 2:49 am — Replies 11 — Views 1033