So this is making me crazy. I’ve been searching all over the web and I just can’t really seem to get an answer. How does the Taiwanese government tax stocks and/or equities from International sources? For example, an S&P 500 index fund held in an online brokerage account? Are gains and dividends taxed differently? And with them being not Taiwan sourced, I assume you have to arrange to have them taxed at source?
All the information that I found so far only quotes that Taiwan sourced stocks are not taxed on capital gains, and that Taiwan based dividends have special tax treatment. I haven’t been able to find any information related to International stocks.
This is an interesting question. Does Taiwan tax foreign investments? I know US mutual fund companies (Vanguard, T Rowe Price, etc.) really dislike having investors as foreign residents and basically require you to maintain a US address, right? Are you bringing the money back to Taiwan or relying on foreign investment income? I’d go and ask the tax office.
Iiuc, there is no special tax treatment on foreign capital gain. They are all foreign income. Foreign income more than 1m NTD should be reported, but may not be taxed until 6.7m NTD.
This depends on the country of source income and the tax treaty between that country and Taiwan. I recommend getting a copy of the relevant treaty and giving it a read:
If the source income country is not covered by a treaty, as I understand it, both country’s rules apply and you will pay tax as per Taiwan’s rules and the other country’s rules.
and you can see for example, “dividends from foreign companies received by resident individuals may be subject to AMT at a rate of 20%.” The book also has a section about AMT.
How capital gains are treated (for Taiwan-sourced gains, at least) has changed within the past two years, so keep that in mind when searching.
(Caveat: the following does not include United States tax laws, which are a special case unto themselves)
@fifieldt - Thanks for that information pamphlet. It is great.
“Gains from securities transactions
From January 1, 2016 onwards, capital gains derived from transactions in marketable securities are exempt from income tax.”
Ok, so that is good. Per that pamphlet ( needs to be confirmed by tax agency), capital gains on any stock on a market, including non-Taiwan stocks, are exempt from capital gains tax from Taiwan’s taxation.
However the following is slightly misleading in relation to capital gains from stocks:
The question is a simple one. What does “country of source income” mean in this context? Is it the location of the stock exchange that you purchased the securities on? No. Pretty much every country in the world bases taxes on capital gains from equities on country of residence, which in this case is Taiwan. They are collected post source, at tax filing time. Unless you are still considered a tax resident of your home country or choose to / must file a tax return there, it should have no effect. Check with your home countries tax laws in foreign income as a non-resident for your legal tax obligation.
Now, this is all just for capital gains from stocks. Dividends/interest is a different situation.
Ok, so for Foreign company sourced dividends, this is what we have:
“In addition, dividends from foreign companies received by resident individuals may be subject to AMT at a rate of 20%.”
And the following relating to AMT rules :
Resident taxpayers with AMT taxable income of more than NT$6.7 million may be subject to AMT at the current rate of 20%. Under the Income Basic Tax Act, a taxpayer must
calculate the amount of AMT due on income subject to AMT and compare the result with the regular income tax payable. Resident taxpayers must pay the higher of the AMT or regular income tax payable amounts. Any foreign taxes paid on offshore income may be offset against AMT payable with certain limitations.
AMT is based on the following formulae:
• Income subject to AMT = Regular taxable income + add- back items
• AMT = (Income subject to AMT - NT$6.7 million) x 20%
The add-back items include overseas income exceeding NT$1 million in a tax year, proceeds from certain life insurance and annuity policies, income derived from transactions of privately-placed securities investment trust funds, and non- cash charitable donations claimed as itemised deductions.
It is a fair bit to digest. It is even more so in that now we must consider the tax agreement with the source country, which will likely be taken at source, ie from your broker as a tax before you receive it. This generally is anything from 10-25%, depending on the country and the agreement with Taiwan. In this case, compared to capital gains from the sale of equities above, the country of the stock/fund does matter. I know the United States takes 25% off of dividend payments already from me with my US Index (as a foreign investor) and I am currently in Canada. So it definitely has an impact if you would be relying on dividends or interest rather than gains as income.
Going back to the AMT formula above, I think as long as your Taiwan income + your dividends/interest are not above 6.7 million NT$, you will not owe additional taxes in Taiwan. However, you already have had to pay the withholding tax at source, so it is not like it was completely “tax free”.
This is my take on it.Thanks again to @fifieldt for the information.
All of the information in my last 2 posts still needs to be confirmed by the taxation office.
What are you answering “yes” to? And how does a chart take into account the intricacies of tax law and its differentiation of income types? I appreciate the input, it just doesn’t seem all that helpful in this case.
Thanks for all the work to figure this out.