Dividend withholding on foreign taxes


K

Kenneth Almquist

I've been wondering what can be done to reduce withholding
on foreign dividends, and I've noticed something curious.
Vanguard mutual funds report paying quite a wide range of
dividend withholding taxes. For example, in the case of
France:

Vanguard Fund Withholding rate
------------- ----------------
European Index Fund 10.54%
Tax-managed Intl. Fund 13.77%
Global Equity Fund 7.05%
Intl. Value Fund 3.85%
Intl. Growth Fund 0.00%
Intl. Explorer Fund 3.20%

In the case of the individual French stocks owned by United
States residents, the withholding rate is supposed to be
15%, though in my case 25% was withheld last year,
presumably due to an error. 15% is being withheld this
year.

Can anyone explain how Vangaurd gets these tax rates? Is
there any way to predict which funds will pay lower foreign
taxes in the future?

Thanks in advance for any enlightenment.

Kenneth Almquist

(Note: I calculated the withholding rates for Vanguard
funds from by dividing the foreign tax (column B) by the
corresponding entry in the foreign income column (column D).
The foreign tax information forms are available on the web
at the following URL's:

http://flagship5.vanguard.com/VGApp/hnw/content/PlanEdu/TaxCenter/PEdTaxEuroStkIndxContent.jsp
http://flagship5.vanguard.com/VGApp/hnw/content/PlanEdu/TaxCenter/PEdTaxPacStkIndxContent.jsp
http://flagship5.vanguard.com/VGApp/hnw/content/PlanEdu/TaxCenter/PEdTaxEmrgMktsStkIndxContent.jsp
http://flagship5.vanguard.com/VGApp/hnw/content/PlanEdu/TaxCenter/PEdTaxGlobalEquityFundContent.jsp
http://flagship5.vanguard.com/VGApp/hnw/content/PlanEdu/TaxCenter/PEdTaxIntlValueFundContent.jsp
http://flagship5.vanguard.com/VGApp/hnw/content/PlanEdu/TaxCenter/PEdTaxIntlGrwthFundContent.jsp
http://flagship5.vanguard.com/VGApp/hnw/content/PlanEdu/TaxCenter/PEdTaxIntlExplrFundContent.jsp
 
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