Andrew Herdman

Do Your ETF Dividends Qualify For the 15% Rule?

Interesting post, thanks. Just to complicate matters further, spare a thought for those international investors who are still subject to 30% dividend withholding taxes on US listed shares and ETF's. There is no withholding tax on interest paid on US bonds held directly by foreign investors, thanks to the portfolio interest exemption. Without this concession it would of course be much harder to persuade foreign investors to finance the US deficit. However, as far as I know, fixed income ETFs held by foreign investors do not enjoy the same treatment and may therefore be subject to 30% dividend withholding taxes on what is actually bond interest. If so, foreign investors do better to hold bonds direct.