Interactive Brokers - Shares Dividends

[xm911e3]

Hi, I am planning to open an account with interactive brokers to buy and hold shares of US company that pays dividends as well as capital gains.

My simple question is how do I receive my dividends?

1) Will the dividends be deposited directly into my Interactive Brokers account or do I need to open a bank account in the US?

2) I am a Singaporean so will I get 30% tax for the dividends I received?

3) What is the custodial rate Interactive Brokers will charge me for looking after my shares?

Thanks.

 

[Purplestars]

Into your IB account

Tax will be applied

No custodian fee

 

[xm911e3]

Into your IB account

Tax will be applied

No custodian fee

I see the dividends will be deposited into my IB account. By any chance, if stocks permit, am I able to set the dividends received to be reinvested again automatically?

Thanks Purplestars for your input. It's been very helpful.

 

[boiboi123]

How come tax will be applied? I thought Singaporean no capital gains tax? Sorry noob here..

Into your IB account

Tax will be applied

No custodian fee

 

[Perisher]

How come tax will be applied? I thought Singaporean no capital gains tax? Sorry noob here..

dividends isn't capital gain.
Capital gain is the profit you buy and then sell for.

 

[Shiny Things]

How come tax will be applied? I thought Singaporean no capital gains tax? Sorry noob here..

Singapore doesn't have capital gains tax. But:

1) Dividends are not capital gains, as Perisher pointed out;
2) The tax is applied by the US tax office, not by the Singaporean tax office. The US taxes dividends like income.

 

[boiboi123]

I see..thank you both!

Singapore doesn't have capital gains tax. But:

1) Dividends are not capital gains, as Perisher pointed out;
2) The tax is applied by the US tax office, not by the Singaporean tax office. The US taxes dividends like income.

 

[sylves]

if dividends are being taxed, is it still worth it to invest with IBKR?

 

[BBCWatcher]

if dividends are being taxed, is it still worth it to invest with IBKR?

Uh, the taxability or non-taxability of dividends has nothing at all to do with the identity of the broker. The only factor a broker potentially adds to the equation is whether the broker charges a fee to credit dividends to the account. Interactive Brokers does not charge any such fees (and that's good), but some other brokers unfortunately do.

 

[sylves]

Uh, the taxability or non-taxability of dividends has nothing at all to do with the identity of the broker. The only factor a broker potentially adds to the equation is whether the broker charges a fee to credit dividends to the account. Interactive Brokers does not charge any such fees (and that's good), but some other brokers unfortunately do.

Ah , in my layman view i tot that the dividend amount will reduce due to the tax since sg broker don't tax dividends at all

 

[BBCWatcher]

Ah , in my layman view i tot that the dividend amount will reduce due to the tax since sg broker don't tax dividends at all

No, it has nothing to do with the broker. Dividends from particular securities are either taxable or not. If taxable the security's country of domicile gets the first chance to levy a particular tax rate, and the country where the security's owner resides gets another chance.

For example, if you buy and hold shares of Microsoft (MSFT), that's a U.S. listed/traded stock. If you're a non-U.S. person residing in Singapore (only) then there is a 30% U.S. dividend tax, paid on a withholding basis. You then receive the remaining 70% of the gross dividend distribution. It doesn't matter which broker you use to hold your shares of Microsoft stock, except that some brokers levy an additional fee which reduces the net dividend you receive. Interactive Brokers does not charge any dividend distribution fees.

Furthermore, shares of Microsoft stock are U.S. estate taxable. Again, it doesn't matter which broker you used to buy and hold those shares.

As another example, if you a non-U.S. person residing in Singapore (only) who goes and buys shares of stock in the French oil company Total, listed and traded in Paris, then you'll be subject to France's dividend tax rate on Total's dividends, whatever that tax rate is. Again, it doesn't matter which broker you use to buy shares of Total, except that some brokers (not Interactive Brokers) keep a percentage of the net dividend as a dividend distribution fee.

Understood?

 

[sylves]

No, it has nothing to do with the broker. Dividends from particular securities are either taxable or not. If taxable the security's country of domicile gets the first chance to levy a particular tax rate, and the country where the security's owner resides gets another chance.

For example, if you buy and hold shares of Microsoft (MSFT), that's a U.S. listed/traded stock. If you're a non-U.S. person residing in Singapore (only) then there is a 30% U.S. dividend tax, paid on a withholding basis. You then receive the remaining 70% of the gross dividend distribution. It doesn't matter which broker you use to hold your shares of Microsoft stock, except that some brokers levy an additional fee which reduces the net dividend you receive. Interactive Brokers does not charge any dividend distribution fees.

Furthermore, shares of Microsoft stock are U.S. estate taxable. Again, it doesn't matter which broker you used to buy and hold those shares.

As another example, if you a non-U.S. person residing in Singapore (only) who goes and buys shares of stock in the French oil company Total, listed and traded in Paris, then you'll be subject to France's dividend tax rate on Total's dividends, whatever that tax rate is. Again, it doesn't matter which broker you use to buy shares of Total, except that some brokers (not Interactive Brokers) keep a percentage of the net dividend as a dividend distribution fee.

Understood?

wow, thanks BBC for the detailed explanation! it is clear to me now!