Sister Liu from Shanghai received her first U.S. stock dividend in 2026 and noticed that the amount deposited was 30% less than expected. Upon checking, she discovered that she had left the tax identification field blank when opening her account, so the platform withheld 30% as a default.
She doesn't realize that, under the U.S.-China tax treaty, if you fill out Form W-8BEN correctly, only 10% is withheld; if you leave it blank, 30% is withheld automatically. This isn't the platform being unscrupulous—it's the default rule for tax residency status.
This article clearly explains the logic behind filling out Form W-8BEN, the benefits under the 10% Agreement, renewing expired forms, and the individual income tax exemption under the Stock Connect program. It’s recommended reading for anyone who holds U.S. stocks.
01
Where Do Withholding Taxes Come From?
The statutory withholding tax rate on dividends paid by the United States to non-resident aliens is 30%; however, under the U.S.-China tax treaty, Chinese tax residents who file Form W-8BEN are eligible for treaty benefits, reducing the withholding tax on dividends to 10%.
Capital gains (the difference between the buying and selling prices) are exempt from withholding tax for foreign investors in the United States, regardless of whether a W-8BEN form is filed. Therefore, instances of “30% being withheld” almost exclusively occur in connection with dividends, not fluctuations in stock prices.
Key point: Form W-8BEN is used to “declare your country of tax residency.” If you enter “China,” you’ll be eligible for the 10% withholding rate; if you leave it blank, the platform will have to withhold at the statutory 30% rate—that’s how Sister Liu ended up with the 30% rate.
02
How to Fill Out Form W-8BEN
Key Points for Completing the Form: Select “China” for tax residency status; ensure your name matches your passport; enter an address in China; enter your Chinese ID number (18 digits) as your Taxpayer Identification Number (FTIN); and declare that you are claiming the 10% treatment for dividends under Article 9(2) of the U.S.-China Tax Treaty.
Common mistakes: Entering the wrong country for your identity, leaving the FTIN field blank or entering incorrect information, or having a name that does not match your passport—any of these will prevent you from qualifying for the 10% form, and the application will be returned with the 30% form as the default. Be sure to fill out the tax section carefully when opening an account.
Validity: The W-8BEN form expires every 3 years and must be renewed; the brokerage firm will send an email reminder. If it expires without being renewed, dividends will revert to the 30% withholding rate. Set a reminder to renew it before it expires.
If you’re facing a similar situation—such as having dividends on U.S. stocks withheld at a rate of 30%, being unsure how to fill out Form W-8BEN, or wondering whether your brokerage channel qualifies for the 10% rate—feel free to scan the QR code to contact Qicaiying’s online customer service (WeChat/Phone: 18620388671). We’ll help you verify your tax status and brokerage channel. Feel free to scan the QR code to contact Qicaiying’s online customer service (WeChat/Phone: 18620388671), and we’ll help you sort out this entire process from start to finish.
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03
Be Aware of Channel Differences
By filing Form W-8BEN through a U.S.-based brokerage firm (such as First Securities or Interactive Brokers) or a compliant Hong Kong brokerage firm, you can generally receive the benefits under the 10% agreement. However, due to structural issues, some Hong Kong brokerage channels may be unable to correctly pass on the agreement benefits, and dividends may still be subject to a higher withholding tax rate.
Reality in 2026: Mainland residents who purchase U.S. stocks through Hong Kong brokerage firms must verify whether the firm supports the tax benefits under the W-8BEN agreement. Be sure to ask about the “withholding tax rate on U.S. stock dividends” before opening an account—don’t wait until the funds are deposited to discover any issues.
In a nutshell: Even when buying the same U.S. stocks, choosing the wrong account type can cause dividend withholding to change from 10% to 30%. When opening an account, make sure to ask about “tax treatment” as a key consideration.
04
Hong Kong Stock Connect to Remain Exempt from Individual Income Tax Through 2027
Another option: Buy Hong Kong stocks through the Stock Connect program, where dividends are temporarily exempt from personal income tax (this policy is in effect through the end of 2027). For retail investors who primarily invest in Hong Kong stocks, the Stock Connect program offers greater tax advantages than investing in U.S. stocks.
However, the Hong Kong-China Stock Connect program does not cover U.S. stocks. If you want to buy U.S. stocks like NVIDIA or Apple, you’ll still need to use a U.S. stock account and Form W-8BEN. The tax rules for these two channels are different, so don’t mix them up.
Retail investors in 90% only need a W-8BEN to handle U.S. stock taxes; they do not need an ITIN (U.S. Individual Taxpayer Identification Number). An ITIN is only required if you have other U.S. tax filing obligations; it is not needed for ordinary U.S. stock trading.
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05
How to Lower Taxes
First, make sure to enter the correct identification information when opening an account: Select “China” for Form W-8BEN, enter your ID number for the FTIN, and opt for the 10% agreement. Second, choose the right channel: Confirm that your brokerage supports the agreement’s benefits; don’t fall into the trap of the default 30% setting.
Third, don’t forget to renew: Renew every three years and set a reminder. Fourth, choose the appropriate route: For investments primarily in Hong Kong stocks, use the Stock Connect program to avoid individual income tax through 2027; for investments in U.S. stocks, use Form W-8BEN.
In a nutshell: The difference between the “30% vs. 10%” scenarios for U.S. stock dividends in 2026 comes down to whether you file Form W-8BEN—and whether you fill it out correctly. This is a tax break that’s practically free; not taking advantage of it would be a real shame.
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