Withholding

Tax taken out before the money reaches you

In detail

The payer deducts the tax first and hands it to the government, so you receive the net amount and do not have to work it out yourself. If the amount withheld differs from what you finally owe, it is settled later.

Example

A $500 dividend with 20% withheld arrives as $400.

Differences by country

Japan — In Japan a withholding-type account has the broker deduct and remit 20.315% on each sale (as of 2026).

South Korea — In Korea 15.4% is taken from interest and dividends when they are paid (as of 2026).

Related terms

Dividend tax Tax return Capital gains tax

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For learning, not investment advice. Decisions are your own.