Following regulations issued by the US Internal Revenue Service (IRS) under Section 871(m) of the US tax code, non-US holders of US CFD instruments are taxed on dividend adjustments in the same way as non-US holders of the real dividends. Dividend adjustment on derivatives that reference US equities are deemed to be US-source of income and are tax required as per the US tax regulations.

As a Qualified Derivatives Dealer, Dukascopy Bank is authorized to pay dividends in the same amount as the underlying equity with a consequent obligation to withhold the relevant tax amounts.

What securities are affected?

The withholding tax doesn't apply to qualified indices that represent a broad based, passive indices like S&P 500, Dow Jones Industrial 30, NASDAQ 100, and other indices that satisfy specific criteria of the 871(m) regulation. The withholding tax, however, applies to all Single Stock CFDs on shares in US incorporated companies, and non-qualified indices and ETFs which contain US equities, such as, including but not limited to:

  • VNQ.US - Vanguard REIT ETF
  • XOP.US - SPDR S&P Oil & Gas Explor & Production ETF
  • XLE.US - Energy Select Sector SPDR Fund
  • XLK.US/USD - Technology Select Sector SPDR Fund
  • XLP.US/USD - Consumer Staples Select Sector SPDR Fund
  • XLU.US - Utilities Select Sector SPDR Fund
  • XLY.US - Consumer Discretionary Select Sector SPDR Fund
  • DVY.US/USD - iShares Select Dividend ETF
  • GDX.US/USD - VanEck Vectors Gold Miners ETF
  • IVE.US/USD - iShares S&P 500 Value ETF
  • IVW.US/USD - iShares S&P 500 Growth ETF
  • IYR.US - iShares U.S. Real Estate ETF

What is the withholding tax rate?

The mandatory withholding tax is currently set at 30% while Dukascopy Bank is furher working on the implementation of reduced tax rates under double tax treaties.