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The Resource The definition and taxation of dividends

The definition and taxation of dividends

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Summary
Facts: HCorpSh, FCorpSh, HCorpP, and FCorpP (where 'Sh' stands for shareholder and 'P' for payer) are all corporations for purposes of Host Country's income tax law. HCorpSh and HCorpP are considered domestic persons for purposes of Host Country's income tax law and FCorpSh and FCorpP are considered foreign persons for purposes of that law. HI and FI are individuals; HI is considered a domestic person for purposes of Host Country's income tax law and FI is considered a foreign person for purposes of that law. HCorpSh, FCorpSh, HI, and FI are direct shareholders in HCorpP and FCorpP. HCorpP and FCorpP make distributions to their shareholders that are considered dividends for purposes of Host Country's income tax law. Questions: A. What is the nature of dividends under Host Country's income tax law? In particular: a. What is the basic definition of a 'dividend'?; b. If the definition of a dividend depends on value earned by a corporation, how is that value determined?; c. If value earned is relevant, does it matter whether the value was earned before or after the shareholder acquired its/his/her stockholding? If it does not matter, what is the policy justification (if any) for this under Host Country's income tax law?; d. Must a corporation have a certain intent in making a payment in order for the payment to constitute a dividend?; e. Do the tax authorities of Host Country ever 'deem' a payment by a corporation to be a dividend, or deem a corporation to have paid a dividend even when no payment was in fact made? If so, under what circumstances? Is such at odds with the basic definition of a dividend, particularly if intent is part of that definition?; f. If 'sourcing' of income (i.e., as income from Host Country sources or income from foreign sources) is necessary under Host Country's income tax law, how are dividends sourced under that law?; B. How are dividends taxed under Host Country's income tax law? In particular, explain how each of the following dividends is taxed under that law: a. The dividend received by HCorpSh from HCorpP; b. The dividend received by HCorpSh from FCorpP; c. The dividend received by FCorpSh from HCorpP; d. The dividend received by FCorpSh from FCorpP; e. The dividend received by HI from HCorpP; f. The dividend received by HI from FCorpP; g. The dividend received by FI from HCorpP; h. The dividend received by FI from FCorpP. C. How might the answers given to the first two questions be affected by an income tax treaty to which Host Country is a party?
Language
eng
Work
Publication
Contents
  • Belgium p. 3-9; Canada p. 10-19; China p. 20-26; Denmark p. 27-29; France p. 30-33; Germany p. 34-37; Italy p. 38-41; Japan p. 42-46; Netherlands p. 47-50; Spain p. 51-56; Switzerland p. 57-60; United Kingdom p. 61-65; United States p. 66-72
Instance
Label
The definition and taxation of dividends
Title
The definition and taxation of dividends
Creator
Subject
Language
eng
Summary
Facts: HCorpSh, FCorpSh, HCorpP, and FCorpP (where 'Sh' stands for shareholder and 'P' for payer) are all corporations for purposes of Host Country's income tax law. HCorpSh and HCorpP are considered domestic persons for purposes of Host Country's income tax law and FCorpSh and FCorpP are considered foreign persons for purposes of that law. HI and FI are individuals; HI is considered a domestic person for purposes of Host Country's income tax law and FI is considered a foreign person for purposes of that law. HCorpSh, FCorpSh, HI, and FI are direct shareholders in HCorpP and FCorpP. HCorpP and FCorpP make distributions to their shareholders that are considered dividends for purposes of Host Country's income tax law. Questions: A. What is the nature of dividends under Host Country's income tax law? In particular: a. What is the basic definition of a 'dividend'?; b. If the definition of a dividend depends on value earned by a corporation, how is that value determined?; c. If value earned is relevant, does it matter whether the value was earned before or after the shareholder acquired its/his/her stockholding? If it does not matter, what is the policy justification (if any) for this under Host Country's income tax law?; d. Must a corporation have a certain intent in making a payment in order for the payment to constitute a dividend?; e. Do the tax authorities of Host Country ever 'deem' a payment by a corporation to be a dividend, or deem a corporation to have paid a dividend even when no payment was in fact made? If so, under what circumstances? Is such at odds with the basic definition of a dividend, particularly if intent is part of that definition?; f. If 'sourcing' of income (i.e., as income from Host Country sources or income from foreign sources) is necessary under Host Country's income tax law, how are dividends sourced under that law?; B. How are dividends taxed under Host Country's income tax law? In particular, explain how each of the following dividends is taxed under that law: a. The dividend received by HCorpSh from HCorpP; b. The dividend received by HCorpSh from FCorpP; c. The dividend received by FCorpSh from HCorpP; d. The dividend received by FCorpSh from FCorpP; e. The dividend received by HI from HCorpP; f. The dividend received by HI from FCorpP; g. The dividend received by FI from HCorpP; h. The dividend received by FI from FCorpP. C. How might the answers given to the first two questions be affected by an income tax treaty to which Host Country is a party?
Citation source
In: Tax management international forum. - London. - Vol. 28 (2007),
http://library.link/vocab/creatorName
Malherbe, J.
Language note
English
http://library.link/vocab/subjectName
  • dividend
  • tax treaty
Label
The definition and taxation of dividends
Instantiates
Publication
Contents
Belgium p. 3-9; Canada p. 10-19; China p. 20-26; Denmark p. 27-29; France p. 30-33; Germany p. 34-37; Italy p. 38-41; Japan p. 42-46; Netherlands p. 47-50; Spain p. 51-56; Switzerland p. 57-60; United Kingdom p. 61-65; United States p. 66-72
Label
The definition and taxation of dividends
Publication
Contents
Belgium p. 3-9; Canada p. 10-19; China p. 20-26; Denmark p. 27-29; France p. 30-33; Germany p. 34-37; Italy p. 38-41; Japan p. 42-46; Netherlands p. 47-50; Spain p. 51-56; Switzerland p. 57-60; United Kingdom p. 61-65; United States p. 66-72

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