Withholding tax

Withholding tax is an amount a country deducts from a dividend before the money leaves for the shareholder. The country where the company is based collects it, so a dividend from an American company is reduced before it ever reaches a European account. The rate that applies depends on the country of the company, the country you live in and any treaty between them, and on paperwork your broker may or may not have filed for you.

Why it matters

The practical consequence is that gross and net are two different numbers, and only the net one ever appears in your bank balance. A projection built on gross amounts will overstate your income year after year, quietly. Whether any of the deduction can be credited or reclaimed depends on your own tax position and on rules that change; the percentages and procedures that apply to you belong on the website of your tax authority, not in a glossary. This page describes the mechanism and is not tax advice.

How BullBenchmark shows it

We read the amounts from your broker statements as they were recorded, which means the received figures are the net ones that actually landed. Because the year report closes off each calendar year on one page, the dividend total you read there is the same total your records will show. You can see how received dividends are presented on the demo portfolio.

Related terms

Dividend · Ex-dividend date · Base currency

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