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Take STD ADR for example

STD ADR Shareholder Remuneration

Since I will invest through local broking firm from my home country (Malaysia), it is not possible for me to claim back tax from US and Spain government. For ADR investor relationship website, it is clear that Spain government is going to tax 19% if I choose to receive cash.

I was wondering, will US government tax my received dividend again, after deduct from Spain government?

Cheok Yan Cheng
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1 Answers1

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Surprisingly enough, this one isn't actually all that complicated. No, you will not be taxed twice.

Dividends are paid by the company, which in this case is domiciled in Spain. As a Spanish company, the Spanish government will take dividend witholding tax from this payment before it is paid to a foreign (i.e. non-Spanish resident) shareholder.

What's happening here is that a Spanish company is paying a dividend to a Malaysian resident. The fact that the Spanish stock was purchased in the form of an ADR from a US stock market using US dollars is actually irrelevant. The US has no claim to tax the dividend in this case.

One brave investor/blogger in Singapore even set out to prove this point by buying a Spanish ADR just before the dividend was paid. Bravo that man!

http://www.investmentmoats.com/money-management/dividend-investing/how-to-calculate-dividend-withholding-taxes-on-us-adrs-for-international-investors-my-experience-with-telefonica/

thepassiveinvestor
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