Question for anyone who holds British Petroleum (BP) stock

[TheFarseer]

On many foreign stocks, when you receive a dividend, the country the company is in will withhold some money for taxes. You can get this money back from the US government by filing a form to get back foreign taxes paid on investments as a credit on your income tax, but it's kind of a pain and not free if you go to a professional. I want to know if the British government will withhold taxes if I bought BP stock and received a dividend. I know someone on DU has BP stock and knows this! I have looked all over the net for this and even called BP. Thanks to anyone who knows!

[TheFarseer]

1. found the answer

UK does NOT impose withholding on dividends paid to non-residents. Why didn't I just START looking at Wickipedia?

[mwooldri]

2. Wouldn't it depend also on which market the shares were brought on?

It'd be true if the shares was purchased on the London Stock Exchange, but AFAIK BP also trades in New York, shares in $.

Plus if it's UK shares and you get paid in £'s then read this:

http://www.hmrc.gov.uk/taxon/uk.htm

They call witholding differently, they call it "tax credit". It's 10% up to $34,800, 32.5% over that. So for example, if you are a UK tax payer and have enough income so that you're in the 40% tax bracket and you receive a dividend of $1000, $100 has already been witheld, you'll have to pay HM Revenue another $300 for tax.

As far as the IRS goes... they treat it as income, I'd guess... you'd be able to claim that 10% back from US government... Looking on IRS site, Form 1116 would be what you need to fill out. Plus BP might give a 1099-Div to make it easier too... but if they send you the UK paperwork, it'll detail the "tax credit" on that too (tax credit==tax you paid).

Disclaimer: I am not a tax professional, not an accountant, not a lawyer. I just read the appropriate sites and this is my interpretation.

Mark.

[TheFarseer]

3. I'm not sure

I am assuming these shares would be purchased on the NYSE. Perhaps if they are purchased from NYSE, it is not considered a foreign stock at all (for US residents). I have heard this opinion as well, since over half of BP's profits are from the US (so says some guy I was talking to). Perhaps I will just have to jump in and see what happens for sure when they deposit the money!