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When you own ADRs, you own the underlying foreign shares, and the country in which the foreign corporation is located will often require the withholding of that country's income tax from the dividends distributed to you.

Depending on the tax treaty that is in place between the U.S. and the foreign country in question, you may be able to claim back a part or all of the dividend tax withheld, or you generally may use the withholding tax as a credit against U.S. income taxes. Your broker may send you instructions about reclaiming withheld taxes if a treaty applies or about the foreign tax credit if a treaty does not apply.
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