Dividends & DWT
As a shareholder you sometimes may receive dividends (e.g. vodafone shares). This type of income is assessable in your income tax for the year it is received.
The company will deduct Dividend Withholding Tax (DWT) as required by Revenue.
This DWT is 20% of dividend made by an Irish resident company to shareholders.
There are exemptions from DWT.
DWT does not apply to distributions not subject to tax in the recipient’s hands (i.e. dividends from patent companies to qualifying shareholders).
You as the shareholders will be taxable on the gross dividend at marginal rates, but will be entitled to a tax credit for the tax withheld by the company.
Hence the requirement to complete and submit an annual tax return if you are in receipt of dividends.