Withholding tax

Also seen as: dividend withholding, tax withheld at source

How is withholding tax calculated?

The dividend you receive is the gross dividend reduced by the withholding rate.

$\text{Net dividend} = \text{Gross dividend} \times (1 - r)$

where $r$ is the withholding rate applied at source. Because the deduction happens before you receive the cash, the simulation credits only the net amount, and the difference is the tax withheld.

Defaults in Fincanva

• Withholding on dividends is applied automatically, based on your tax residency and where the dividend is paid from. There is no withholding-rate field anywhere in Fincanva — no setting to enter one, and none to switch withholding off independently of the rest of the tax model.
• The dividend credited in your results is already net of the withheld amount.
• The withheld portion is visible per event in the positions drill-down, under "Dividends & splits", as the "Withholding tax rate" beside each dividend's gross and net figures. That panel is where you read the rate that was actually applied to a given dividend.

Worked example

A holding pays a 100 gross dividend from a foreign market that withholds tax at source. The withheld portion is taken before the cash reaches the simulated account, so instead of the full 100 the strategy is credited the net amount. Take an illustrative 15% withholding — a round number chosen to show the arithmetic, not the rate Fincanva applies to any particular holding: that is 85 received and 15 withheld. In the positions drill-down the event shows the gross dividend, the withholding, and the net that actually reached the strategy — read the rate off that panel rather than assuming one, because it depends on your residency and on where the dividend was paid from.

This describes what Fincanva models in a simulation, not tax advice for your own situation — see Is this financial advice?.