Message Font: Serif | Sans-Serif
 
UnThreaded | Threaded | Whole Thread (2) | Ignore Thread Prev Thread | Next Thread
Author: billjam Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121095  
Subject: Growing Trend to Become Foreign Corporations Date: 6/17/2014 10:59 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 5
You're probably wondering what this has to do with personal taxes. I would too except my largest stock position is AMAT in an IRA account. Buried in the 500 page prospectus for the merger with a Japanese company and subsequent conversion of the new entity to a Dutch company is something that should concern individual investors in the US.

First, the conversion to shares of the new Dutch company will be taxable as a capital gain for individual US shareholders. Okay, my shares are in an IRA so I'm settled from that tax bill, but read on.

Second issue, dividends and other cash distributions paid by the new Dutch company may be subject to a 30% Dutch withholding tax. My only experience with something like this has been some Canadian stock I held. Dividends were subject to 15% Canadian withholding. It couldn't be recovered. I couldn't claim credit against US taxes because it was in my IRA. IOW, I lost 15% of my dividends, which in the US would not have been taxed until I withdrew funds from the IRA.

Today I see another large company talking about incorporating overseas, this one in Ireland. I don't know what the Irish rules are on dividend withholding but stockholders ought to be warned.

This is a growing issue which our Congress keeps ignoring. Meanwhile these companies are going to dodge US taxes and in some cases individual shareholders are going start paying foregin taxes. Congress could fix this but they are too busy doing nothing and blaming each other for their lack of action.
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post Back To Top
Author: Wradical Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 121006 of 121095
Subject: Re: Growing Trend to Become Foreign Corporations Date: 6/17/2014 11:17 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 6
I have some Dutch stocks, held personally. Royal Dutch Shell, Unilever, Heineken. The withholding rate is 15% on all; that may be due to a treaty provision, but that's the most common rate I see.

You're right - the foreign withholding is lost, for an IRA or other retirement account (or if an exempt org.) So, either accept that as an additional investment expense, if you really love the stock, or keep foreign stocks in a personal account.

Note - for about the last 10 yrs. or so, there has been no withholding on British stocks' dividends. That might be a consideration if you want some non-US stocks in your IRA.

Bill

Print the post Back To Top
UnThreaded | Threaded | Whole Thread (2) | Ignore Thread Prev Thread | Next Thread
Advertisement