GLOSSARY TERM
Tax Treaty
A tax treaty is an agreement between countries that helps reduce or clarify double taxation.
What does this mean in practice?
This often matters when you receive foreign dividends or other cross-border investment income. A tax treaty may reduce the tax withheld in the country where the income comes from, or explain how the tax should be handled between the two countries involved.
Example
A tax treaty may reduce the withholding tax rate on dividends paid by a foreign company, which means the investor may keep more of the dividend.
Why it matters
Tax treaties can affect how much foreign investment income you actually keep. This is especially relevant for international investors using global funds, ETFs or foreign shares.
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