US securities categorized as REITs do not benefit from the double taxation agreement, so a 30% withholding tax is applied at destination (even if they are listed in the United States and the W8-BEN form is filed). This withholding tax is due to the peculiarity of these securities. Since they are real estate investment assets, it is difficult to distinguish whether a person investing in REITs is receiving dividends or capital gains.

In the case of REITs issued in the U.S., this difference is resolved on a year-over-year basis, at which time the REITs analyze their earnings to know whether the distribution they have made to their shareholders originates from their own business or from the divestment of their assets. After this reclassification process, if applicable, part of the 30% initially withheld is returned.

The reclassifications take place in the second quarter of the year following the year of withholding and are published on each company's official website. The tax authorities and the US regulator review the origin of each income received by the company during the year and, depending on its origin, the corresponding taxation is applied. After this reclassification, an average withholding tax is calculated and applied to each dividend separately. In this way, and by way of example, the initial withholding tax of 30% could end up being 30%, 28.9%, or 15%.

Depending on the result, we will deposit the excess withholding tax refund into your HeyTrade account.

We hope you have found this information useful. If you have any questions, please write us through our chat or send us an email to support@heytrade.com. It will be our pleasure to help you! 😊