The tax rate for foreign dividends is determined according to a formula and will depend on the actual marginal rate of the taxpayer and can therefore be less than the maximum effective rate of 15%. A taxpayer who receives foreign dividends must also include the gross amount of the foreign dividends (total amount of foreign dividends gross of any foreign withholding taxes) in his or her tax return.
Foreign dividends are however in most cases (unless the shareholder holds more than 10% of the issued shares in the foreign company) subject to a partial exemption. This exemption is calculated by using the following formula: 25/40 x gross foreign dividends.
See also attached.
