IRS updates qualified dividend country list

The IRS released Notice 2024-11 on Dec. 28, 2023, updating the list of countries with a tax treaty with the United States that meet the qualified dividend requirements in Section 1(h)(11). Under Section 1(h)(11), a dividend paid to an individual shareholder by either a domestic corporation or a "qualified foreign corporation" is generally subject to tax at the reduced rates applicable to certain capital gains. A qualified foreign corporation includes certain foreign corporations that are eligible for benefits of a comprehensive income tax treaty with the United States that the Secretary determines is satisfactory for purposes. The notice updates the list of treaties that meet these requirements.

The following changes to the list were made with respect to the 2023 year:

• Chile was added to the list after the United States-Chile tax treaty went into force on Dec. 19, 2023. See our prior coverage on the Chile tax treaty.
• Consistent with Announcement 2024-5, Hungary was removed from the list after the termination of the United States – Hungary tax treaty, effective Jan. 8, 2023.
• Russia was also removed from the list as a result of the IRS pause to provide assistance to Russian tax authorities through the exchange of information between the United States and Russia, effective for dividends paid on or after Jan. 1, 2023. Dividends paid after this date no longer meet the exchange of information program as required in paragraph 1(h)(11) of the tax treaty.