The tax at source legislation in the United States was amended on 1 January 2001. The law provides that an owner of securities issued by a US company must report his or her country of taxation to the custodian.
Obligation to report
The obligation to report concerns the following persons:
- citizens of the United States
- persons with dual citizenship (of which one is US)
- holders of the US Green Card
- persons residing in the United States
- persons or companies whose country of taxation is other than Finland.
Regardless of citizenship (except US), the obligation to report is not applicable if:
- the investor's country of residence is Finland and none of the above-mentioned points concern him or her.
Companies are obligated to sign a tax agreement confirmation.
Consequences to the customer for neglecting the obligation to report:
If the customer fails to report the above-mentioned information, the bank shall withhold tax at source according to the maximum US tax percentage (30-31%) on all return, and in some cases on the selling price. According to the Finnish-American tax agreement, the normal tax at source for interest income is 0% and for dividend income 15%. If the customer is liable to taxation in the United States, return received in Finland will not be subject to tax at source.