Interactive Brokers - non-US citizens and tax deductions

Hi non-US citizens investing with Interactive Brokers!

I try to figure out how IB is deducing taxes from an account belonging to a non-US citizen and non-US resident. I found the following page with more information:
http://ibkb.interactivebrokers.com/node/938

I also went through the IRS publication 515 which is linked at the same page, but could not fully understand the following:

  1. Are taxes on capital gains immediately withheld by IB?
  2. If yes, is it still necessary to do a tax declaration in the US?

Hi,

I am trading with IB from 2014 begging, so 2014 will be my first taxation year with IB and USA. I filled in W8 form and stated to pay taxes at my country of origin (EU). As far as I found out with IB and local tax authorities:

  1. Dividends are taxed by IB once payed in USA and having a treaty in effect between my country of tax residence and the US I should pay at home only difference in case dividends taxation is higher in my country. Now it is equal to US 15%, so no dividends taxes locally (before 2014 there was 15% at US and 20% locally, so I would be taxed 15% in US and 5% locally).

  2. As for tax gains, having W8 filled with paying taxes locally, no taxes to US will be withheld by IB and all capital gains are taxed locally by local tax norms. No any tax declaration to US needed in addition to what will be provided by IB to US IRS without your interaction.

Keep in mind this is my case and you should check everything with your local authorities. Twice :slight_smile: