Investors fail to claim dividend withholding tax
May 25 2011, 1:54 pmPat Sweet- Accountancy – 25th May
Two new surveys are warning that UK investors with overseas assets risk missing out on billions of pounds by failing to claim foreign dividend withholding tax (DWT) in cases where the UK has a double taxation agreement in place.
The tax specialist website taxback.com has calculated that only 7% of DWT is reclaimed globally. Taking into account the high net worth individuals, pension companies and life insurance companies who could be entitled to claim refunds, the company says ‘the amount of DWT being left on the table could be enormous’.
Seamus Murphy, senior tax manager at taxback.com, said: ‘If you translate this to those in the UK with overseas assets in their portfolios, the loss could be upwards of £1bn a year.’
These findings are backed up by a report from tax reclamation services specialist Goal Group, which calculates that £10.72bn of global investors’ returns from their cross-border shares and bonds are likely to be lost from last year’s earnings due to reclamation failures, representing a quarter of all reclaimable tax on cross-border securities.
Goal’s statistics suggest that UK investors lose around £1.02bn in this way, coming second behind the US. The company says that the value of cross-border equities investments rose 163% during 2001-09, nearly double the market rate.
Goal’s CEO, Stephen Everard, said: ‘Since savvy investors are increasingly adopting a global investment strategy to maximise their earnings from securities – both equities and bonds – a substantial proportion of their rightful returns will risk languishing in foreign tax regimes if the reclamation of withholding tax is not treated with the due attention it deserves.’
