What dividend withholding tax is and who pays it
When a company pays a dividend, its own country can tax it at source: the company deducts the tax, pays it to its tax authority and sends the shareholder the rest.
For an owner who lives abroad, withholding is the middle of 3 layers: the company pays tax on its profit first, and the country where you are tax resident taxes the dividend after it. That is the usual split in digital nomad taxes: the company's country takes a share a treaty can cap, and the country you live in can tax the dividend again with a credit for it.
Under Article 10 of the OECD Model Tax Convention, the template most double tax treaties follow, the company's country may tax the dividend at no more than 15% of the gross amount, or 5% when the shareholder is a company holding at least 25% of the payer for 365 days. Without a treaty the full domestic rate applies.
Dividend withholding tax rates by country
The table shows what 15 company countries in the Nomad Tax Index withhold on a dividend to an individual owner abroad, as checked for the Index data on September 28 and 29, 2026.
Tax withheld on a dividend paid to an individual owner abroad, before any treaty claim
| Company's country | Withheld from an owner abroad | How it works |
|---|---|---|
| US corporations | 30%, unless a treaty lowers it (IRS) | A single-member LLC pays its owner no dividends |
| Irish companies | 25% (Revenue), or 0% with Form V2A (Revenue) | For residents of the EU, the EEA or a treaty country, on a certified form |
| Romanian companies | 16% (Fiscal Code art. 224) | EU or EEA parent companies holding 10% for 1 year are exempt (PwC) |
| Hungarian companies | 15% (Personal Income Tax Act) | Individuals only; nothing on dividends to companies |
| Panama corporations | 0% to 10%, or 20% on bearer shares (PwC) | 0% with no operating notice and no Panamanian-source income; otherwise 10%, or 5% on foreign-source, export or free-zone profit |
| Georgian companies | 5% (PwC) | Tax Code Article 130(1); treaties can lower it |
| Bulgarian companies | 5% final tax (NRA) | Lower treaty rate on application |
| Estonian companies | 0% (EMTA) | The company pays 22/78 income tax on the distribution instead |
| Cypriot companies | 0% to an individual (PwC) | The Special Defence Contribution does not reach individual owners abroad |
| UK companies | 0% (HMRC) | Nothing is deducted, and a non-resident's UK tax on UK dividends is limited to the tax deducted |
| Singapore companies | 0% (IRAS) | No withholding even where a treaty lists a rate |
| Hong Kong companies | 0% (PwC) | No withholding on dividends to shareholders abroad |
| UAE companies | 0% (PwC) | Corporate Tax Law Article 45: 0% unless the Cabinet sets another rate |
| Maltese companies | 0% (PwC) | Shareholders can reclaim 6/7 of the 35% company tax |
| BVI companies | 0% (BVI Business Companies Act s. 242) | Dividends are exempt |
What reaches you also depends on the treaty between the company's country and yours, and on the tax the company paid before the dividend.
Treaty rates: how a treaty lowers the withholding
A treaty rate is a ceiling on the company's country, so it helps only where the domestic rate is higher. The UK-US treaty shows the usual shape: the US may withhold no more than 15% on a dividend to a UK resident, 5% when the owner is a company holding at least 10% of the voting power, and nothing when the owner is a pension scheme or a company that has held 80% of the voting power for 12 months and passes the treaty's limitation on benefits test (Article 10(2) and (3)).
A treaty never raises a domestic rate: Singapore withholds nothing even where its treaties list a dividend rate. An income tax treaty covers taxes on income and on capital (OECD Model, Article 2), not inheritance or gift tax, so unless a separate estate tax treaty applies, the shares behind your dividends can meet inheritance and gift tax abroad in both countries when they pass to someone else.
Who gets the 5% treaty rate on a US dividend
5% applies
A UK company owns 40% of the voting shares of a Delaware corporation and receives a $50,000 dividend. As a company holding at least 10% of the voting power, it pays the US no more than 5%, or $2,500 (UK-US treaty, Article 10(2)(a)).
15% applies
A founder living in London owns 100% of a Delaware corporation in her own name. As an individual she gets 15% under the same treaty, $7,500 on the same $50,000, however large her stake.
Total tax on company profit paid out to an owner abroad
Withholding is the middle layer, so a country with no withholding can still take more in total. Paying out $100,000 of profit in full to an owner abroad costs 29.44% in Romania, where the company pays 16% and then withholds 16% of the rest, and 21.5% in the UK, which withholds nothing.
- Company tax
- Dividend withholding
Source: Nomad Tax Index data: each country's company tax and dividend withholding, sourced on its incorporate hub Ireland's 25% is its rate for non-trading income: a company whose only person works abroad carries on no trade in Ireland, where trading profit pays 12.5%. Without a certified Form V2A, 25% withholding takes the total to 43.75%. Estonia's 22% is the company's income tax on the distribution. Malta's company pays 35% and the shareholder claims back 6/7. Hungary's company tax includes local business tax. The British Virgin Islands and the UAE take 0% at this profit, as do Hong Kong and Panama on profit earned abroad.
Show the numbers
| Company tax | Dividend withholding | Total | |
|---|---|---|---|
| Romania | 16% | 13.4% | 29.4% |
| Ireland, with Form V2A | 25% | 0% | 25% |
| Hungary | 11.1% | 13.3% | 24.5% |
| Estonia | 22% | 0% | 22% |
| United Kingdom | 21.5% | 0% | 21.5% |
| Georgia | 15% | 4.3% | 19.3% |
| Cyprus | 15% | 0% | 15% |
| Bulgaria | 10% | 4.5% | 14.5% |
| Singapore | 8.2% | 0% | 8.2% |
| Malta, after the shareholder refund | 5% | 0% | 5% |
0% withholding does not mean 0% tax
Your home country credits tax withheld from your dividend, but usually not tax the company paid on its profit. The Estonian Tax and Customs Board says an e-resident in most cases cannot use the income tax the Estonian company paid for relief at home, because a different person paid it (EMTA). Paid to an owner living in Spain, the company's 22% is followed by Spain's 19% to 30% on the dividend as savings income (Spanish income tax law), with nothing withheld to credit.
How your country of residence taxes the dividend
The dividend then goes on your tax return at home, and the tax withheld abroad becomes a credit with 2 limits: no more than the treaty rate, and no more than your own country's tax on that dividend. HMRC applies both limits to UK residents.
A UK basic-rate taxpayer pays 10.75% on dividends (GOV.UK), less than the 15% the US keeps under the treaty, so 4.25 points of the US tax are never credited, while a higher-rate taxpayer at 35.75% has the full 15% credited and pays the difference to HMRC.
| US tax withheld, Form W-8BEN on file15% treaty rate | $1,500 |
|---|---|
| UK dividend tax at 35.75% | $3,575 |
| Credit for the US taxCapped at the treaty rate | $1,500 |
| UK tax still to pay | $2,075 |
| Without the form: US tax withheld at 30%The UK still credits only $1,500; the other $1,500 comes back only as a US refund | $3,000 |
| Total tax with the form on file | $3,575 (35.75%) |
Assumes the £500 (about $663) dividend allowance is used by other dividends. Rates from GOV.UK and the UK-US treaty, Article 10(2), credit rules from GOV.UK, read October 12, 2026.
Where your country's rate is below the withholding, the withholding is your real rate. Bulgaria taxes a resident's foreign dividends at 5% of the gross amount and credits the foreign tax (NRA), so a dividend that lost 16% in Romania costs 16% in total unless a treaty claim cuts the Romanian share.
How 10 countries tax a resident's foreign dividends
| Where you live | Tax on a foreign dividend |
|---|---|
| Living in the UK | 10.75%, 35.75% or 39.35% above the £500 (about $663) allowance (GOV.UK); 0% for up to 4 years under the foreign income and gains regime (GOV.UK) |
| Living in Spain | 19% to 30% as savings income, with a credit for foreign withholding (BOE) |
| Living in Portugal | Flat 28% when no Portuguese tax was withheld, or added to progressive income by choice; 35% from a jurisdiction on Portugal's low-tax list (CIRS Article 72) |
| Living in Italy | 26% substitute tax (TUIR art. 18; DPR 600/1973 art. 27), except on dividends from privileged-tax jurisdictions |
| Living in Romania | 16% plus a 10% health contribution above 6 minimum wages (PwC), with a credit for foreign tax (PwC) |
| Living in Bulgaria | 5% final tax on the gross dividend, with a credit for foreign withholding (NRA) |
| Living in Georgia | Exempt as income without a Georgian source (Tax Code Article 82(1)(u)) |
| Living in the UAE | Not taxed: there is no personal income tax (PwC) |
| Living in Singapore | Not taxed when received by an individual |
| Living in Thailand | Taxed only when brought into Thailand, for income earned from January 1, 2024 (PwC) |
In a country that does not tax foreign dividends at all, such as Georgia, the UAE or Singapore, there is nothing to set the withholding against, so whatever the company's country takes is final.
US citizens carry the US layer wherever they live: the US taxes them on worldwide income (IRS), and tax withheld on a foreign dividend can count toward the US foreign tax credit on the same income.
Paying dividends to a non-resident owner: what the company does
Only a distribution of profit to a shareholder is a dividend. A salary or director's fee is employment income, and pay for the use of your copyright, such as a platform's payout for videos or software, can be a royalty under a treaty (UK-US treaty, Article 12), so online income earned abroad meets a treaty's royalty article, not its dividend article. How you take money out of your own company is a salary vs dividends decision first.
A US single-member LLC pays no dividends: the LLC is disregarded (IRS), so the owner's draws carry no dividend withholding. A US corporation is a separate taxpayer and the withholding agent on its own dividends: it takes the foreign owner's Form W-8BEN, withholds 30% or the treaty rate (IRS), and reports the dividend on Form 1042-S, due to the owner and the IRS by March 15 of the next year together with Form 1042 (IRS).
Elsewhere the company deducts the tax when it pays and hands it over: in Romania by the 25th of the month after the payment (Fiscal Code art. 224(5)), while in Bulgaria the company declares and pays the 5% and a foreign individual owner files nothing there (NRA).
When the owner is a company, other rules apply. Romania exempts dividends to EU or EEA parent companies that have held at least 10% for 1 year (PwC), the kind of relief a holding company in the EU is built to receive. Cyprus withholds nothing from individuals abroad (Cyprus Tax Department), but 5% on dividends to related companies in low-tax jurisdictions and, when the payer is not listed, 17% on dividends to companies in jurisdictions on the EU list of non-cooperative jurisdictions (PwC).
How to claim the reduced treaty rate
Relief at source means the payer applies the treaty rate because your paperwork is on file before the payment; a refund means the full domestic rate is taken and you claim the difference back afterward.
For US dividends the form is W-8BEN. You give it to the payer, not the IRS, and it claims a reduced rate as a resident of a treaty country; without it, the payer may have to withhold 30% (IRS). A form signed in 2026 stays valid until December 31, 2029, unless something on it changes, such as your country of residence.
Ireland's exemption works the same way with Form V2A, certified by the tax authority where you live; an exemption issued in 2026 is valid until December 31, 2031 (Revenue). Bulgaria's 5% can be cut to a lower treaty rate on application (NRA), and payers and tax offices elsewhere usually ask for a tax residency certificate from the country you live in.
Claiming the treaty rate on a dividend
- List every payer: each broker and company that pays you a dividend withholds on its own records and needs its own form.
- For US shares or a US corporation, give the payer Form W-8BEN claiming your treaty country's rate before the payment date.
- For an Irish company, have your tax authority certify Form V2A and give it to the company or its withholding agent: it removes the 25% outright.
- Check the rate on the next dividend statement: the treaty rate on a US dividend, not 30%.
- Report the gross dividend at home and claim a credit for the tax withheld, up to the treaty rate.
- Reclaim anything above the treaty rate from the paying country; your own country will not credit it (GOV.UK).
- Give every payer a new form within 30 days of a move (IRS), because the old one names the wrong treaty.
David's note
I pick the company's country only after the owner's country of residence is settled. A 5% Bulgarian dividend is final for someone living in the UAE but only a down payment for a UK higher-rate taxpayer, who owes 35.75% in total, so a company country chosen before the move often turns out wrong.
