Assume the following scenario:

  • natural person (not US citizen or Green Card holder) is tax-resident in some European (EU) country
  • owns a US-based securities/brokerage account that holds shares of a public company listed in the London Stock Exchange.

Does that natural person have tax liability in the US for dividend income or capital gains (when shares are sold) simply by virtue of the securities/brokerage account being located in the US?

Or is the location of the securities account that holds the shares irrelevant and the only thing that matters is the tax jurisdiction of the natural person (which is not US)?

I know that non-US tax residents are not liable for taxes in the US for interest earned on ordinary US bank accounts but I have no idea what the situation is regarding securities accounts holding shares of companies listed in some foreign exchange.

  • 1
    You might be liable for dividend income, but unless it's more than $12,000 (or $24,000 if married) you probably won't owe any taxes. If more than $600 you'd need to file a tax return just to tell them why you don't owe any taxes. – RonJohn Jul 16 '19 at 5:39
  • 1
    You must submit W8-BEN form to declare you are not taxable in US. Your broker will do curing process and accept it. If this form is not filled broker holds authority to deduct backup withholding around 24% of total proceeds. – Abs Jul 28 '19 at 8:53

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