U.S. Dividend Withholding Tax of 30%: Still 30% for Taiwanese Investors with a W-8BEN? Bond ETF Exemption Ratios (QII) at a Glance

When Taiwanese investors buy U.S. stocks through an overseas broker, the U.S. first withholds 30% tax on their dividends, and filing a W-8BEN doesn’t change that. The reason is that there is no income tax treaty in force between Taiwan and the U.S. But not every distribution is withheld at 30%: a large share of the distributions from U.S. Treasury ETFs and most U.S. bond ETFs counts as “interest-related dividends,” which non-U.S. persons can receive without withholding.

The short answer: ordinary dividends (from stocks and stock ETFs) are withheld at 30%, and a W-8BEN can’t change that; for U.S. Treasury ETF distributions, based on the percentages the funds published for 2025, SGOV, SHV, TLT and others can be 100% exempt. BND is about 92%, and BNDX, which holds non-U.S. bonds, is 0%. In practice, IBKR withholds 30% first and refunds it between January and March of the following year; if you miss that window, the only option is to file for a refund with the U.S. yourself.

This post is based on public information from the IRS, the U.S. Congress and fund companies, checked on 15 October 2026. It explains tax rules only and is not investment or tax advice, nor a recommendation to buy or sell any ETF. Each fund’s percentage changes every year; the figures the fund company publishes for that year prevail.

U.S. dividend withholding tax: generally 30% for non-U.S. persons

Under Section 871 of the U.S. Internal Revenue Code, dividends, interest and similar income that nonresident aliens receive from U.S. sources are taxed at 30% on the gross amount, withheld directly by the paying broker when the distribution is paid (IRS guidance).

Residents of countries with an income tax treaty can use a W-8BEN to claim the treaty rate, for example 15%. Taiwan has none, so:

U.S.-Taiwan tax treaty: not in force as of 15 October 2026

The U.S. House passed H.R.33 (the United States-Taiwan Expedited Double-Tax Relief Act) on 15 January 2025, and it was sent to the Senate Finance Committee on 16 January, with no further progress since; the Senate’s companion bill, S.199, also stalled after being sent to the Finance Committee on 23 January 2025 (Congress record for H.R.33, record for S.199). Taiwan’s Ministry of Finance also explains that the bill must pass the Senate and be signed by the President, and both sides then need to complete their own procedures (Ministry of Finance).

A W-8BEN can’t change the 30%, so why file one

The W-8BEN instructions state that the form does several things:

1. Certifies that you are not a U.S. person and are the beneficial owner of the income.
2. Claims a lower rate where a tax treaty exists: not available to Taiwan.
3. Keeps exempt income from being withheld: for interest-related dividends from bond funds to be exempt, Section 871(k) requires the broker to have a statement that you are not a U.S. person, which is the W-8BEN.
4. Prevents backup withholding when you sell stocks: capital gains that non-U.S. persons make on selling U.S. stocks are generally not subject to U.S. tax, but you need a W-8BEN so that 24% isn’t withheld from the sale proceeds.

Without a W-8BEN, under U.S. Treasury regulations, a payment for which the broker cannot confirm the payee’s status is generally presumed to be made to a U.S. person, and without a taxpayer identification number, 24% backup withholding applies.

A W-8BEN generally remains valid from the date it is signed until the end of the third full calendar year after that; for example, one signed in 2026 is valid until the end of 2029. If your status changes, you must notify the broker within 30 days.

Which distributions can be exempt: interest-related dividends and the QII percentage

The Form 1040-NR instructions (for tax year 2025) state that these two kinds of dividends received by nonresident aliens are generally exempt from the 30% tax:

• Interest-related dividends: the portion of a mutual fund’s (including a U.S.-registered ETF’s) distributions that passes on U.S. interest the fund received.
• Short-term capital gain dividends: exempt only if you were in the U.S. for fewer than 183 days during the year.

The interest a fund receives counts only if it is qualifying U.S.-source interest, such as interest on U.S. Treasuries, on deposits and on most U.S. corporate bonds; interest on bonds from foreign issuers does not count (Section 871(k)). Each year, funds publish what share of their distributions consists of this interest, called the QII (qualified interest income) percentage.

2025 exemption percentages for common bond ETFs

Based on the 2025 data published by each fund company:

A few notes:

• The portion outside the QII percentage is still withheld at 30%: for example, about 92.3% of BND’s distributions is exempt, and the remaining 7.7% or so is still withheld at 30%.
• BNDX is 0%: it holds bonds issued outside the U.S., so the interest is not U.S.-source; but BNDX itself is a U.S. fund, so its distributions are still U.S. dividends and are withheld at 30% for Taiwanese investors.
• Vanguard does not publish percentages. I calculated the figures for the Vanguard funds in the table by dividing Vanguard’s published per-share exempt amount by the total per-share distribution; the JPST figure was calculated from amounts in its annual report. The USFR and JPST figures are for fiscal years, not calendar year 2025.
• For 2026 through October, iShares’ monthly data shows SGOV, SHV, TFLO, SHY, IEF and TLT still at 100% (iShares 2026 monthly data).

What actually hits your account: 30% withheld first, refunded January to March of the following year

When a fund pays a distribution, it doesn’t yet know the QII percentage for the full year, so brokers usually withhold 30% first and make corrections once the fund publishes its final classification the following year.

• IBKR: in a reply on its official education page, IBKR states that distributions like SGOV’s are first taxed as ordinary dividends when paid; once the fund provides the final classification the following year, IBKR reclassifies them and adjusts the over-withheld tax, and distributions paid in 2025 are processed between January and March 2026. Once the reports have been filed with the IRS in March, no further corrections can be made (IBKR).
• Firstrade and Schwab: I found no official explanation of how they handle this. I only saw forum users report that Firstrade (cleared through Apex) refunded part of the tax at the end of March the following year, which has not been officially confirmed.

So if you hold an ETF like SGOV, you’ll see 30% withheld every month on your statements for the whole year. That’s normal; check whether it was refunded in the first quarter of the following year.

If you miss the correction: file Form 1040-NR yourself for a refund

Once the broker’s correction window has passed, the only option is to file for a refund with the IRS yourself:

• Form: Form 1040-NR, with the Form 1042-S issued by your broker attached. For people with no U.S. wages in tax year 2025, the filing deadline is 15 June 2026 (Form 1040-NR instructions).
• You need an ITIN first: the IRS Taxpayer Advocate Service explains that before filing a 1040-NR, you must apply for an ITIN with Form W-7 (TAS).
• Deadline: TAS explains that a refund claim must be made within 3 years of the date Form 1042-S was issued.
• What can’t be refunded: the 30% withheld from a Taiwanese investor’s ordinary dividends is the correct amount of tax, so there’s nothing to refund; only the part that should have been exempt but was withheld can be refunded.

If the amount is small, the time spent applying for an ITIN and filing may cost more than the refund itself.

Irish-domiciled ETFs: how the rules differ

Irish-domiciled UCITS ETFs are not U.S. funds, so the U.S. does not withhold tax from their distributions to you. When the fund itself receives U.S. dividends, the U.S.-Ireland tax treaty generally sets the rate at 15%; on U.S. bond interest it is 0% (IRS treaty rate table).

• Stock funds: a U.S. ETF means 30% for Taiwanese investors, while an Irish fund pays 15% at the fund level, a fairly large gap.
• U.S. Treasury funds: after the broker’s correction, a U.S. ETF with a high QII percentage is in effect also close to tax-free, so the main difference from an Irish fund lies in estate tax, not dividend withholding.

For the estate tax difference between U.S. and Irish ETFs, see VT vs VOO: Tax and Estate Tax for Non-U.S. Investors; for a comparison of IB01 and SGOV, see IB01 vs SGOV.

On the Taiwan side: overseas dividends must be reported

U.S. withholding is not the end of it. For Taiwanese tax residents, U.S. stock dividends are overseas income subject to the Alternative Minimum Tax: if a household’s total overseas income for the year is under NT$1 million, it is not added to basic income. Tax already paid in the U.S. can be credited against the basic tax within the prescribed limits under Article 13 of the Income Basic Tax Act (所得基本稅額條例), which requires a tax payment certificate issued by the U.S. tax authority, with authentication. For the calculation, see the “On the Taiwan side” section of VT vs VOO.

FAQ

If a Taiwanese investor files a W-8BEN, how much U.S. dividend withholding tax applies?

Still 30% on ordinary dividends. A W-8BEN certifies that you are not a U.S. person and, where a tax treaty exists, claims a lower rate; there is no income tax treaty in force between Taiwan and the U.S., so ordinary dividends are withheld at 30%. You still need to file one: the exemption for interest dividends from bond funds and freedom from backup withholding when you sell stocks both depend on it.

What happens if you don't file a W-8BEN?

Under U.S. Treasury regulations, when a broker cannot confirm your status it will generally presume you are a U.S. person; without a taxpayer identification number, 24% backup withholding applies, and even the proceeds from selling stocks may be withheld. Most brokers also won't let a non-U.S. person open an account without a W-8BEN.

Which dividends are not subject to the 30% withholding?

According to the IRS Form 1040-NR instructions, interest-related dividends that nonresident aliens receive from mutual funds (including U.S. ETFs) are generally exempt from the 30% tax; for people who spend less than 183 days in the U.S. in the year, short-term capital gain dividends are exempt too. Each year, funds publish what share of their distributions falls into this category, called the QII percentage.

Are SGOV distributions withheld at 30%?

According to data published by iShares, the QII percentage of every SGOV distribution in 2025 was 100%, so all of it can be exempt. But IBKR explains that distributions like SGOV's are first withheld at 30% as ordinary dividends when paid; once the fund publishes the final classification the following year, the over-withheld tax is corrected and returned between January and March.

What if you miss the broker's correction of over-withheld tax?

Once the broker files with the IRS in March, it can no longer make corrections. After that, the only route is to file Form 1040-NR yourself to claim a refund, and you must apply for an ITIN before filing. The IRS Taxpayer Advocate Service explains that a refund claim must be made within 3 years of the date Form 1042-S was issued.

Is the U.S.-Taiwan tax treaty in force?

Not as of 15 October 2026. The U.S. House passed H.R.33 in January 2025; after it went to the Senate Finance Committee, there has been no further progress. The Senate's companion bill, S.199, is also stuck in the Finance Committee.