When you open your Wealth account in DolarApp, it’s important to understand the associated tax implications. Below, we explain the key aspects to keep in mind.
What taxes apply to my investments?
When you invest through your Wealth Account, your income may be taxable.
That income can come from two main sources:
Capital gains: the profit you make when selling an asset at a higher price than you bought it.
Dividends: cash payments made by companies to shareholders.
Both may be subject to tax, depending on U.S. rules and your local country’s rules.
What tax do I pay in the U.S.?
As a non-U.S. investor, you’ll complete the W-8BEN form when you open your account. This IRS form certifies that you are not a U.S. tax resident and ensures the correct U.S. withholding tax is applied to your income, based on any tax treaty between your country of residence and the U.S.
Dividends: By default, dividends from U.S. companies are subject to a 30% withholding tax, though this rate may be reduced if a tax treaty applies. This tax is automatically withheld at source before the dividend is paid into your account. You do not need to make an additional payment to U.S. authorities.
Capital gains: The U.S. does not tax capital gains for most non-U.S. investors. If you sell a stock at a profit, your gain is generally not subject to U.S. tax.
The W-8BEN form is valid for the year you sign it plus the next three calendar years. After that, you’ll need to resubmit.
What tax do I need to pay to my local regulator?
Each year, DolarApp provides you with a report containing the information you need to declare your investments to your local tax authority. This report is made available in February and includes relevant movements and balances from your account. To view and download your tax report in the app:
Go to the ‘Wealth’ tab
Tap the ‘Settings’ button in the top right corner
Select the ‘Tax documents’ option
Choose the year you want to review
Download the report for that year
This report is useful for filing your annual tax returns if your country requires you to declare foreign investments. Local taxes may apply to both dividends and capital gains, depending on your country’s rules. You’re responsible for checking and complying with your local tax obligations.
Note that the United States has information-sharing agreements with many countries (e.g., Mexico, Argentina, Brazil, Colombia). Under these agreements, the IRS may share information about your investments with your local tax authority. This means your local authority may receive details about your Wealth Account even if DolarApp does not report directly to them.