Spanish Shares in an ISA

chezmoi

I have Spanish Shares (eg Banco Santander and Telefonica) in a platform's ISA. Can I reclaim Spanish witholding tax deducted from the dividends via my Tax Return?

The platform does not reclaim witholding tax (except perhaps for US shares).

I know for shares not held in an ISA, you can reduce your HMRC tax bill by the witholding tax if the return is completed correctly.

Can anyone help?

masonic

Withholding taxes can only be reclaimed from the Spanish government, if they considered you eligible for a refund, and that claim would need to go via the platform holding the shares. I can't think why a UK resident would be eligible for a refund when holding shares in a UK ISA. You haven't paid any UK tax on these dividends, so therefore there is no double taxation and nothing to reclaim from your UK tax bill.

wmb194

https://forums.moneysavingexpert.com/discussion/comment/82031829#Comment_82031829

I'm guessing the OP's asking whether they can claim tax relief under the UK-Spanish tax treaty for the requisite amount: 15%. Spain withholds 19% so the OP could reclaim the 4% difference from Spain. Not with Spain, but I've always done this direct with the foreign tax authority and not via a platform/broker.

As you say, the answer is no. It's the same for capital gain losses crystallised in an Isa: you cannot use these to offset capital gains made in a taxable account.

masonic

https://forums.moneysavingexpert.com/discussion/comment/82031997#Comment_82031997

"I've always done this direct with the foreign tax authority and not via a platform/broker"

That's interesting. I suppose I've come across this with pension-wrapped investments and US WHT. Out of interest, what evidence do foreign tax authorities require to verify you are the beneficial owner of the holding?

poblomov

I think each foreign tax authority will have their own requirements. There's this FO case that touches on the problem with the requirements of a Swiss tax reclaim where the shares are held in a nominee account

https://www.google.com/url?sa=t&source=web&rct=j&opi=89978449&url=https://www.financial-ombudsman.org.uk/decision/DRN-5768218.pdf&ved=2ahUKEwjD9aOfoICVAxXhU0EAHUqgLTAQFnoECGMQAQ&usg=AOvVaw3vNiyyojEYXXXPGn2iw-n3

wmb194

https://forums.moneysavingexpert.com/discussion/comment/82032045#Comment_82032045

It varies. Some just ask for broker statements to be included with your claim, some ask for stamped letters from your broker verifying the tax withheld (France and IIRC Germany) whilst some simply reserve the right to ask for evidence but in the first instance will trust you (The Netherlands, I imagine it depends on the amount you're claiming).

It's changed over time though. Ten+ years ago I've reclaimed money from the Swiss tax authority from a nominee account with copies of broker statements but judging by Povlomov's post it might be more difficult now, with a letter from your broker required.

Edit: It's a shame that European countries can't organise something similar to the US' W8-BEN form to obviate the need for this aggravation.

chezmoi

Can I just say a sincere and heartfelt thank you to those who took the time out and replied.

As I said when shares are held outside of tax-free wrappers, the witholding tax can be used to reduce your UK HMRC perosnal tax bill and to the self-employed in particular make sure your tax affairs do that.

Best wishes.

wmb194

https://forums.moneysavingexpert.com/discussion/comment/82043432#Comment_82043432

Only up to the double taxation treaty (DTT) rate, though. So e.g., The Netherlands withholds 15% but the DTT only allows you to use 10% on your UK tax return. As I posted above, “…under the UK-Spanish tax treaty … 15%” and not the 19% withheld.