GLOSSARY TERM
Double Taxation
Double taxation means that the same income can be taxed twice by two different countries or at two different stages.
What does this mean in practice?
For investors, this often happens with foreign dividends. First, the country where the company is based may withhold tax before the dividend reaches you. Then your home country may also tax that same dividend. In some cases, tax treaties or local tax rules may reduce this problem, but not always fully.
Example
You live in one country and own shares in a company from another country. The company pays a €100 dividend. Before you receive it, the source country may withhold part of it in tax. After that, your home country may also tax the dividend you received.
Why it matters
Double taxation can reduce your net return, especially in international investing. Understanding it helps you compare investments more clearly and avoid overestimating the income you actually keep.
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