Normally, for US non-resident aliens, the withholding tax on dividends is 30%. However, dividends that qualify as "portfolio interest" are not taxed (i.e 0% tax). When a US domiciled bond ETF pays out dividends, part of the dividend may be classified as "portfolio interest", so the total dividend withholding tax paid may be less than 30% of the dividends. The question is: how could a non-resident alien know the proportion of dividends that is tax-free before buying a bond ETF?

1 Answer 1


The tax rate varies by bond ETF. The amount of Qualified Interest Income (QII) for ETFs is usually published by the fund company on its website. It will require some digging, but the document is usually found in the "legal documents", "tax documents", or "tax center" sections of their website. If you can't find it, contact the fund company to ask about ETFs' Qualified Interest Income (QII) for non-resident aliens.


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