The choice you make every May
Every filing season, anyone receiving Taiwan stock dividends faces the same choice:
- Combined calculation (dividend combined-tax option (股利合併計稅), with 8.5% credit, capped at NT$80,000)
- Separate calculation (dividend separate 28% tax (股利分離課稅 28%), not included in aggregate income)
Picking the wrong side can cost you tens of thousands every year. This article explains how to decide which one pays off.
How the two regimes differ
Combined calculation (rolled into individual income tax (綜所稅))
- Dividends are added to your annual aggregate income
- You get a creditable amount = dividends × 8.5%
- Credit cap: NT$80,000 per filing household
- Final tax = regular tax owed − min(dividends × 8.5%, 80,000)
Separate calculation
- Dividends are not included in aggregate income
- Taxed at a flat 28%
- Calculated independently from other income; brackets don't apply
Which is cheaper depends on your marginal bracket
At its core, this choice is a comparison of two numbers:
| Scenario | Combined total burden | Separate total burden |
|---|---|---|
| Marginal rate 5% after dividends | 5% − 8.5% = −3.5% (net gain) | 28% |
| Marginal 12% | 12% − 8.5% = 3.5% | 28% |
| Marginal 20% | 20% − 8.5% = 11.5% | 28% |
| Marginal 30% | 30% − 8.5% = 21.5% | 28% |
| Marginal 40% | 40% − 8.5% = 31.5% | 28% |
Rule of thumb:
- Marginal rate ≤ 30%: combined is almost always cheaper
- Marginal rate = 40%: separate wins (31.5% vs 28%)
In other words, only high-income households (those in the 40% bracket, annual taxable income above NT$4.53M) benefit from separate taxation. Most Taiwan salary earners top out at 20% or 30% — combined is the right call.
2024 individual income tax brackets
| Taxable bracket (NT$) | Marginal rate |
|---|---|
| 0 – 560,000 | 5% |
| 560,001 – 1,260,000 | 12% |
| 1,260,001 – 2,520,000 | 20% |
| 2,520,001 – 4,720,000 | 30% |
| 4,720,001 and up | 40% |
Taxable income is what's left after exemptions, deductions, and special deductions. Your actual marginal rate is usually lower than the bracket your monthly salary alone would suggest.
What the NT$80,000 cap means
The combined-calculation credit is capped at NT$80,000 per filing household per year. Doing the math:
- 80,000 / 8.5% ≈ NT$940,000 in dividends hits the cap
- Above NT$940,000, the credit stays fixed at NT$80,000 (no further increase)
- Effectively, the portion above NT$940,000 loses the 8.5% credit benefit
Even so, as long as your marginal rate is ≤ 30%, combined still beats separate. The cap only makes separate taxation more attractive for very high-dividend households (think NT$5M a year in dividends from a high-net-worth investor).
Worked examples
Case 1: Typical salary earner
- Annual salary NT$1,000,000
- Dividends NT$200,000
- Taxable income after deductions ≈ NT$700,000 (12% bracket)
- Combined: (700K × 12% − progressive offset) − (200K × 8.5%) ≈ original tax − 17,000
- Separate: 200K × 28% = 56,000
- Combined saves over NT$50,000
Case 2: High-income professional
- Annual salary NT$5,000,000
- Dividends NT$1,000,000
- Taxable income ≈ NT$4,500,000 (40% bracket)
- Combined on the dividend portion: 1M × 40% − min(1M × 8.5%, 80,000) = 400K − 80K = 320K
- Separate: 1M × 28% = 280K
- Separate saves NT$40,000
Case 3: Retiree living on dividends only
- Annual dividends NT$2,000,000, no other income
- Taxable income after exemptions ≈ NT$1,700,000 (20% bracket)
- Combined: about 1,700K × 20% − progressive offset − min(2M × 8.5%, 80,000) = under NT$140,000
- Separate: 2M × 28% = 560,000
- Combined saves over NT$400,000
Practical notes
When you pick
You choose on the filing form each May. Only one method per year — no mixing.
Married joint filers
Married couples file jointly but can pick calculation methods. Dividend combined/separate choices can be made independently — e.g., the husband picks combined, the wife picks separate. If one spouse is high-income and the other is low-income, you can optimize per person.
Quick decision process
- Run the combined calculation first (on the tax bureau site or via accounting software)
- Run the separate calculation (dividends × 28%)
- Pick the lower one
Most people don't need to think hard about this: combined is almost always right, unless you're a very high earner.
Relationship to overseas income
Note:
- Taiwan stock dividends: domestic income, eligible for combined/separate choice
- US stock / overseas ETF distributions: overseas income, taxed under the Alternative Minimum Tax regime (see our Overseas Income Tax Calculator)
These are two entirely separate tax regimes that don't interact. Your filing will have both a Taiwan dividend section and an overseas income section.
Official sources
- eTax Portal (財政部稅務入口網) — dividend tax calculation and filing
- National Taxation Bureau of Taipei (財政部臺北國稅局) — interpretive rulings on combined vs separate calculation
- Ministry of Finance (財政部) — annual tax policy announcements
Disclaimer
This is a general explanation of the filing regime, not tax or investment advice. Individual circumstances vary — rely on current Ministry of Finance announcements and official calculators, or consult a licensed accountant.