I’ve noticed that the “Tax to Pay” value is incorrectly calculated for foreign interests (and potentially dividends), when the value of “Tax Paid” is higher than the rate defined by a double taxation agreement.
In my example below, I have an Interactive Brokers account, configured in Capitally as located in Ireland. I am a resident of Poland. The Double Taxation Agreement provides that Ireland imposes tax at a rate not to exceed 10% on interest. I did not deliver tax residency documents to IBKR, therefore they deducted full 20% of Irish tax. The latter fact does not matter to the Polish tax office. They expect to receive the difference between the Polish 19% tax rate and the rate defined in the Double Taxation Agreement, that is 19% - 10% = 9%.
Capitally, however, shows Tax to Pay = 0. The 20% Tax Paid is trimmed to 19%, whereas the correct deductible tax should be 10% in this case.
Also the associated country in the report is incorrect - it should be Ireland, not United States. If I have the account in Capitally configured as located in Ireland, then any interests received should be reported and summed under Ireland. The values could them be copied into a declaration like PIT Z/G.
Are you certain, that Polish tax office expects 19 - 10, even if the tax paid was different? I believe it’s based on tax actually withheld, but I may be wrong. On this preset, we simply use whatever is reported by the broker. There are currently no specific double-taxation treaties handled.
As for the country, we’re currently using the Market Country, not Account Country by default, as that was the consensus on how it should be attributed (though no definitive answer exists). You can change the market per transaction (importing from IBKR handles that), or you can modify the preset to use the Account country as before.
Colleague @Adam is right about the amount of tax that can be taken into account when settling with the Polish tax office (US). If there is a double taxation agreement, e.g. 10% for Ireland, only that amount can be recognized as withheld at source, even if the broker withheld more, and the difference must be paid in Poland.
The topic was well explained on one of the live streams hosted by Szafiego but I can’t quickly remember which episode it was.
