How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask Megan C Your Own Question

Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 12522
Experience:  Licensed CPA, CFE, CMA who teaches accounting courses at Master's Level
Type Your Tax Question Here...
Megan C is online now
A new question is answered every 9 seconds

I am a UK born individual, domiciled and permanently resident

Resolved Question:

I am a UK born individual, domiciled and permanently resident for the last 21 years in Mauritius.
I have no US connections what so ever.
If I invest in US quoted stocks through a broker outside the USA (say London) am I subject to any withholding tax on dividends or capital gains tax( Federal or State) on the US stock market investments? Would there be a difference if I used a US stock broker located in the USA?
Submitted: 1 year ago.
Category: Tax
Expert:  Megan C replied 1 year ago.

MyVirtualCPA :

Thanks for asking your question! I'm sorry to hear about your tax issue and I'm going to try my best to help you understand or resolve it.

MyVirtualCPA :

As a non-resident alien you are NOT subject to capital gains tax.

MyVirtualCPA :

There is a 30% tax on dividends paid, but this is waived if the company is foreign, or they are interest/capital gains related dividends

MyVirtualCPA :

The tax treaty between where you live and pay tax and the US could also have a lower dividend tax rate

MyVirtualCPA :

Page 15 of publication 519 deals with this

MyVirtualCPA :

You can review publication 519 here: http://www.irs.gov/pub/irs-pdf/p519.pdf

Customer:

Please clarify......"There is a 30% tax on dividends paid, but this is waived if the company is foreign"

MyVirtualCPA :

If the company that you invested in is listed in the US but is a foreign company you would not pay the 30% tax

MyVirtualCPA :

So, if it's a British company paying the dividend and you are a non-us resident there is no tax

Customer:

Please define ' foreign'.....does that mean if I use a company incorporated in Mauritius for my investments dividends are tax free

MyVirtualCPA :

They are tax free in the US. Now, I do not know about the tax in Mauritius

MyVirtualCPA :

I can only speak to US Tax

Customer:

I am being stupid here!!! When you say they are tax free in US.....earlier...... you advise that there is a 30% tax on dividends. Who withholds this amount and how are the IRS paid, at source, or by filing in arrears?

MyVirtualCPA :

There is a 30% tax on dividends, that is waived if the dividend is from a foreign company, or if the dividend is interest or capital gain related

MyVirtualCPA :

The broker withholds this amount. You must have a US brokered account to purchase stocks listed in the US.

MyVirtualCPA :

If you were to buy from London, you could buy only those American companies who choose to be listed on the London Exchange

Customer:

I planned to use Interactive Brokers (a US Broker) London Office?

MyVirtualCPA :

That's fine. If they are a US broker they can trade on the US exchange, although their office is in London

Customer:

Does it make any difference if I trade personally in my own name as an individual or incorporate a company in Mauritius, or even a US LLC say in Delaware, as the LLC would be tax transparent in the US? Some foreign companies do not list in the US.... but have depositary receipts, what happens in this case? I must get this right as you will appreciate!

MyVirtualCPA :

The same 30% rule holds true for a foreign company

MyVirtualCPA :

If you are a foreign owned US LLC the same tax would also apply. There's no way around the 30% dividend treatment.

Customer:

One must be able to "Treaty Shop" ? with a favourable Double Tax Treaty jurisdiction, that offers lower withholding tax on dividends? How about the US DTA with Malta or Luxembourg....I must find the best route...if you can assist you will receive a greater amount professional work from us as we are using my personal investment (in stock portfolio's put together by several US investment newsletter... that we have combined to create an interesting portfolio... that we would manage from Mauritius where we are licenced and sell to our non US worldwide clients. We have over 20 worldwide offices and have been in business since 1975 WWW.OCRA.COM

MyVirtualCPA :

I'm sorry, I would not have the expertise needed to "treaty shop" to be quite honest

MyVirtualCPA :

But yes, a tax treaty could lower the dividend tax rate

Customer:

Who can advise me please? Fees are not an issue.

MyVirtualCPA :

On this site, we are all independent contractors...I do not personally know the other tax experts on the site. I'm sure there is someone who may have more knowledge of different tax treaties

Customer:

Your honesty and frankness is deeply appreciated and respected. Sincere thanks for your input. One last question do you know if US residents/Citizens have any restrictions tax wise on investing in an offshore fund of US listed securities as per the fund I am putting together in Mauritius? I am petrified of the US authorities... and recognise that we have stringent KYC to undertake on clients and equally stringent due dilligence,on source of funds and anti-money laundering procedures.

MyVirtualCPA :

So long as they pay their taxes on any gains they get from the portfolio they should be fine. However, I'm not sure of the legal restrictions on soliciting business from the US

MyVirtualCPA :

I don't know if a fund would have to register with the US to solicit business from US sourced investors

Customer:

Noted. Thank you and look forward to discussing other tax difficulties with you in the future. What part of the US are you located in?

MyVirtualCPA :

I am located in Tennessee

Customer:

Thank you very much.

Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 12522
Experience: Licensed CPA, CFE, CMA who teaches accounting courses at Master's Level
Megan C and 6 other Tax Specialists are ready to help you

JustAnswer in the News:

 
 
 
Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.
 
 
 

What Customers are Saying:

 
 
 
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
< Last | Next >
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
  • I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight. Bonnie Chesnee, SC
  • Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation. John Minneapolis, MN
  • Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with. Orville Hesperia, California
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex Los Angeles, CA
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP Hesperia, CA
 
 
 

Meet The Experts:

 
 
 
  • Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
< Last | Next >
  • http://ww2.justanswer.com/uploads/KU/KUMI95/2013-9-30_195031_kumar.64x64.jpg Wallstreet Esq.'s Avatar

    Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
  • http://ww2.justanswer.com/uploads/CU/Cuttinggirl/2011-10-29_03719_wcrop2.64x64.jpg Wendy Reed's Avatar

    Wendy Reed

    Enrolled Agent

    Satisfied Customers:

    3052
    15+ years tax preparation and tax advice.
  • http://ww2.justanswer.com/uploads/CATax/2009-08-04_204548_Mark.jpg Mark D's Avatar

    Mark D

    Enrolled Agent

    Satisfied Customers:

    985
    MBA, EA, Specializing in Business and Individual Tax Returns and Issues
  • http://ww2.justanswer.com/uploads/IN/insearchoftheanswer/2013-8-16_0233_attorney.64x64.jpg Richard's Avatar

    Richard

    Tax Attorney

    Satisfied Customers:

    3229
    29 years of experience as a tax, real estate, and business attorney.
  • http://ww2.justanswer.com/uploads/MY/MyVirtualCPA/2012-7-5_44024_cookmegan1.64x64.jpg Megan C's Avatar

    Megan C

    Certified Public Accountant (CPA)

    Satisfied Customers:

    6121
    Licensed CPA, CFE, CMA who teaches accounting courses at Master's Level
  • http://ww2.justanswer.com/uploads/JG/jgordosea/2012-6-7_43138_GordosVeritas.64x64.jpg jgordosea's Avatar

    jgordosea

    Enrolled Agent

    Satisfied Customers:

    2783
    I've prepared all types of taxes since 1987.
  • http://ww2.justanswer.com/uploads/OZ/ozaukeecpa/2012-6-7_193219_Picture1croppedandshrunk.64x64.jpg MequonCPA's Avatar

    MequonCPA

    Certified Public Accountant (CPA)

    Satisfied Customers:

    2231
    CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.