Dividend Tax
Tax levied on dividend income distributed to shareholders.
Dividend tax is charged on the distribution of company profits to shareholders. Because the underlying profits are usually already taxed at the corporate level, dividends represent a second layer of tax — and countries handle this differently. Some apply a flat dividend withholding rate, others tax dividends as ordinary income, and many use imputation or reduced rates to relieve the double burden. Tax treaties frequently lower withholding rates on dividends paid to foreign investors.
Examples
- Qualified dividends in the US are taxed at long-term capital gains rates of 0–20%.
- Many countries apply a 15% treaty-reduced withholding rate on cross-border dividends.