Canada – United States Tax Treaty
The Canada-United States tax treaty caps withholding on dividends at 15% for portfolio investors and 5% for qualifying direct investment, with interest payments fully exempt at 0%. Royalty rates vary by category, from 0% on copyright to 10% on film and television. Pension distributions are subject to 15% withholding at source. This is one of 51 active treaties in Canada's network and one of 64 in United States's. The general dividend rate of 15% compares to a median of 15% across Canada's network and 15% across United States's.
Verified data
IRS Table 1 - Tax Rates on Income Other Than Personal Service Income (Rev. May 2023)
Withholding Rate Summary
Source: IRS Table 1 (Withholding Rates)| Income Type | Treaty Rate | Statutory Rate (United States) |
|---|---|---|
| Dividends (general) Portfolio investors | 15%saves 15% | 30% |
| Dividends (qualified) Beneficial owner is a company holding >= 10% of voting stock | 5%saves 25% | 30% |
| Interest Bank interest, bonds, loans | 0%saves 30% | 30% |
| Royalties (avg) Patents, copyright, know-how, film/TV | 4% | — |
| Pensions Private pension distributions | 15% | — |
| Social Security Government social security benefits | 0% | — |
“Treaty Rate” is the maximum withholding permitted under this treaty. The actual effective rate may be lower if domestic law provides a more favorable rate independently. “Statutory Rate (United States)” shows the rate that applies when no treaty benefit is claimed. Qualified dividend rate requires: Beneficial owner is a company holding >= 10% of voting stock.
Dividends
The general dividend rate of 15% applies to portfolio investors. A reduced rate of 5% is available when beneficial owner is a company holding >= 10% of voting stock. Without the treaty, the statutory withholding rate on dividends is 30%.
Source: IRS Table 1 (Withholding Rates)
Interest
Interest payments (bank interest, bonds, loans) are subject to 0% withholding under this treaty, compared to the 30% statutory rate. Interest is fully exempt from source-country withholding under this treaty.
Source: IRS Table 1 (Withholding Rates)
Royalties
Royalty withholding rates vary by the type of intellectual property. This treaty distinguishes 5 categories, with rates ranging from 0% to 10%.
Source: IRS Table 1 (Withholding Rates)
Pensions & Social Security
Private pension distributions are subject to 15% withholding at source under this treaty. Government social security benefits are exempt from source-country withholding.
Source: IRS Table 1 (Withholding Rates)
Comparative Context
🇨🇦Canada's Network
Among Canada's 51 active treaty partners, the 15% general dividend rate ranks 46th (median: 15%).
| Partner | Rate |
|---|---|
| Singapore | 15% |
| Slovak Republic | 15% |
| Thailand | 15% |
| United States (this treaty) | 15% |
| Vietnam | 15% |
| South Africa | 15% |
| Turkey | 20% |
🇺🇸United States's Network
Among United States's 64 active treaty partners, the 15% general dividend rate ranks 16th (median: 15%).
| Partner | Rate |
|---|---|
| Barbados | 15% |
| Bangladesh | 15% |
| Belgium | 15% |
| Canada (this treaty) | 15% |
| Switzerland | 15% |
| Chile | 15% |
| Colombia | 15% |