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Royal Dutch Shell plc Message Board

  • elkman12 elkman12 Oct 26, 2006 1:17 PM Flag

    duch tax question

    Will I pay 25% tax to the Dutch if I own rds/a in the US?

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    • File form 1116 for the rest.

      You cannot claim a credit on US taxes for the 10% of the dividend the Dutch government must refund to you under the tax treaty, however, as the IRS explains in form 1116 instructions.

    • Let me clarify my question. It�s hard to get much info about Royal Dutch but I read they have a 25% tax on the dividend. If so I will not get about 9%. Because of Dutch tax. 25% less will come to me.

      • 1 Reply to elkman12
      • I will try to clarify...

        Assume that u are a US citizen.

        1) the Dutch tax on your RDS-a dividends can be either 25% or 15%, depending on whether ur broker filed the necessary paperwork to get the tax reduced to 15%. Some brokers (e.g., Fidelity) have done so and some have not or will not do so (e.g., TDWaterhouse - unless they recently did). If ur broker will not file the necessary paperwork, switch brokers (I did).

        2) if you hold the RDS-a shares in an IRA, then you cannot claim the Dutch tax withheld on ur IRS 1040 or Form 1116 (and then it is especially important that ur broker has filed the paperwork necessary to get it reduced from 25 to 15%). The exception to that is if u, as an individual, file with the Dutch gov. for a Qualification Letter. If u get such a letter, then u have no (zero) Dutch tax withheld from ur dividends. I have my RDS-a in an IRA, have a Dutch Qual. Letter and pay no tax to the Dutch Gov.

        3) if you hold the RDS-a shares outside of an IRA, then (as indicated by others here), you can normally get that tax back when you file your 1040.

        Hope that answers your question...if not, ask again...

    • If you own the shares outright (i. e., they aren't held in a brokerage account) you pay, as a U. S. citizen, a reduced tax of 15%. And you can get this back as a credit on your Federal income tax. Maybe someone whose shares are held by their broker can explain how you qualify for the 15% tax rate in that case.

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