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I have just received a dividend of 0.11 $, from which 15% withholding tax was deducted. On the same day I received a dividend of 3,40$ from the same company, but without paying withholding tax. (for 3 shares)

Why is the big payment tax-free? And why don't all companies do it like that?

FYI I am in Germany and the company is located in the US.

Edit (adding some more info):

Bill no.1

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Bill no.2

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As you can see, in the 2nd payment I didn't pay withholding tax (Quellsteuer). (Yes I still "payed" Kapitalsteuer, but I still saved the 15% withholding tax)

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  • Whats the exact name of the tax you paid? Ausländische Quellensteuer, maybe? Aug 7 '20 at 12:03
  • It is the 15% "Quellsteuer" based on the "Doppelbesteureungsabkommen" with the US. "Withholding tax" is what google told me as translation of "Quellsteuer" Aug 7 '20 at 12:39
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    Don't know if it helps anyone, but the declared dividend was $1.17 per share, which the above two amounts ($0.0351 and $1.1349) add up to exactly; the first being exactly 3% of the total. The other main difference I can see is the first bill has "quellensteuer laut doppelbesterungsabkammen (DBA)" which Google translates as "withholding tax according to double taxation"
    – TripeHound
    Aug 7 '20 at 13:31
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    Both were "treated" for German Kapitalertragsteuer (captial gains tax), for which you are still within your personal exempt amount (Freibetrag). I see a difference that US tax was withheld (Quellensteuer, QSt) for one but not for the other. To dig into this, you'll need to find out in which way the two payments differ according to US tax law and the US-German tax treaty. Aug 21 '20 at 11:11
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You provided no specific information so I can only guess what might have happened.

It's possible that you received a special dividend and a regular dividend. Regularly scheduled dividends are considered to be earnings distributions and therefore taxable as ordinary income. Whether a special dividend is taxable or not depends on how the company classifies the special dividend.

And there's always the possibility that your broker made a mistake.

Google for details or call your broker.

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  • What info do you need? I could upload the bills, but they are in german. Aug 7 '20 at 12:41
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    Sorry but I am only familiar with the US market and I do not understand German. Perhaps someone here does and can move the ball further down the field. Aug 7 '20 at 13:54
  • I do read German. Both payments were treated accoding to German capital gains tax, but for one US tax was withheld (which, in consequence was deducted from the German tax withholdings) and for the other not. Thus, the difference is at the "US side" (or the tax treaty) rather than the "German side" of the taxes due. Bob's answer thus may actually be the answer to the question. Aug 21 '20 at 11:15

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