Can anyone explain to me how I have to account for my 2 figure dividend from IAG (British Airways) on my Tax Return, and what other obligations I have in relation to it?
For a start, I am assuming that it goes on the Foreign Pages, as the company is based in Spain and the dividend was taxed and paid in Euros – though converted to sterling before I received it.
1 – The Foreign Pages request “income ...before tax” (column B) and details of tax deducted. According to the IAG dividend Tax Voucher, “Spanish Withholding Tax of 19%" was deducted at source. But is that equivalent to “Foreign Tax” (column C) or “Special Withholding Tax” (column D)?
2 – According to the “SPANISH TAX INFORMATION ON DIVIDENDS FOR IAG UK RESIDENT SHAREHOLDERS” notes on the IAG website, I am a ‘Qualifying shareholder’, and it says:
“A Qualifying shareholder may wish to claim exemption and/or a reduced withholding tax rate in Spain under the UK-Spain Treaty on dividends received from IAG.”
It goes on:
“A refund is claimed by filing a Form 210 and complying with the associated formalities.”
But adds:
“A Qualifying shareholder will generally need to appoint a tax representative in Spain to submit the Form 210 on their behalf. A fee will normally be payable for this and any associated services”
Given that the tax deducted amounts to less than £20, there is clearly no incentive to claim a refund (which would only be partial anyway), so my feeling is sod that for a lark. I’m inclined to give that particular bit of Spanish red tape a miss. However, the notes also say:
“If a Qualifying Shareholder does not claim a refund of Spanish withholding tax when entitled to do so, the Qualifying shareholder may be unable to claim a credit for that Spanish withholding tax against any UK tax liability arising on the dividends to which the Spanish withholding tax related.”
Does this mean I should not be putting an ‘X’ in column E to claim Foreign Tax Credit Relief?
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