Unfortunately, foreign investors do not automatically get the treaty rate applied to dividend payments. Rather, they have to follow a process and file paperwork to the foreign tax authority.

Every taxing authority maintains their own rates and requirements or “common market practice” when granting treaty entitlements to investors. At minimum, most of these practices involve submitting a Certification of Residency to demonstrate that an investor is a resident of a country that is governed by a double taxation treaty.

Depending on the market, investors can demonstrate their eligibility either before or after the dividend is paid. These regimes are called relief at source and post payable reclaim, respectively.