Overseas Dividend Income

meatandtwoveg

You receive dividend income from a Mexican company. They withold 10% for the local authority. You do not claim it back.
Can you offset this tax paid against tax owed to the HMRC.
If the income is paid against shares held within a tax free UK isa or sipp. Can this still be offset against tax owed to the Hmrc. 
Thanks

Jeremy535897

meatandtwoveg said:

You receive dividend income from a Mexican company. They withold 10% for the local authority. You do not claim it back.
Can you offset this tax paid against tax owed to the HMRC.
If the income is paid against shares held within a tax free UK isa or sipp. Can this still be offset against tax owed to the Hmrc. 
Thanks

Under article 10 of the 1994 UK-Mexico double tax agreement, as amended by the 2011 protocol, I would expect the dividends to be taxable only in the UK. That means the 10% should be recovered from the Mexican authorities, but unfortunately it may not be that simple. See the discussion at:

https://www.internationaltaxreview.com/article/b1shlqhvzyzn7c/tax-implications-in-mexico-from-the-distribution-of-dividends-to-residents-abroad

It may well be that Mexico will not refund the 10% tax as dividends in the ISA and the SIPP do not bear UK tax. Nor can that 10% tax be set against other UK income tax.

meatandtwoveg

So can you offset the 10% paid outside a isa or sipp.
If you paid it to Mexico surely you do not pay it again.

Jeremy535897

You can only set the 10% tax deducted by Mexico on a dividend from a Mexican company from the UK tax paid on the same dividend, and only if you can show that you were unable to recover it from Mexico. If the Mexican authorities deduct tax in contravention of the UK's interpretation of the double tax agreement, the UK won't give credit for it. In any event, it may be that the dividend is subject to 0% tax in the UK because of the dividend allowance.