A double tax agreement (DTA), also known as a tax treaty, helps prevent the same income from being taxed twice and supports information sharing between countries. New Zealand currently has 40 DTAs in place with countries considered to be our main investment and trading partners. If you invest in a foreign country, such as buying shares on the US share markets, DTAs generally ensure that your income isn’t taxed twice.
Tax credits on foreign shares
If you’ve received dividends from foreign shares, you may be eligible for a tax credit. To calculate this you’ll need to know;
The rate your dividends were taxed at - this differs depending on where the company is based (see the details in your end-of-year tax reports from Hatch).
Whether New Zealand has a tax treaty with the country where the company is based.
On Hatch, most investments are US‑based and usually taxed at 15% withholding tax, assuming you’ve completed a W8-BEN. For American Depositary Receipt (ADRs), the tax reflects the company’s home country.
Examples of international withholding tax rates
Taiwan - Dividends paid to non-residents are subject to a withholding tax (WHT) of 21%
China - Non-tax resident Enterprises (TREs) without establishments or places of business in China are subject to a withholding tax of 10% on gross income from dividends.
France - Withholding tax is automatically imposed on after-tax profits of a private equity (PE) unless certain conditions are met. New Zealand has a reduced tax treaty rate of 15%
Netherlands - Dividends from Dutch resident corporations are generally subject to a 15% Dutch dividend WHT. New Zealand has a reduced tax treaty rate of 10%
💡 Note: To find the withholding tax rate for the country that the company is based in, you can search online for “Country + withholding tax” and find useful tax information from sources like PWC and KPMG.