Holding shares in a private Tesla outside the US

[aubreymcfato]

Transferring your shares and paying capital gains tax would be a huge bummer, and basically kill the deal for me: I would not be be able to pay because I don't have that much cash...

As @SwTslaGrl was saying, maybe Tesla will create a fund/transfer/brokerage thing for all EU investors, that would probably help.

 

[Johan]

Heard back from my bank (DNB Norway). I summary: If shares are taken private they can no longer be held in the depo with my current bank, likely I will just recieve a stock certificate and be listed with Tesla as an owner. My current broker won't be able to assist med with holding og trading privately held shares. With regard to tax: Likely (he said) I won't be taxed as having sold if I continue holding privately. There are precedents for this within the EU. However, if a company that was public in the EU is taken privately and listed outside of the EU usually that means it's treated as trading one stock for another (=a sale). So I guess as long as Tesla stays registered in the US one might be able to convince the tax authorities that it's still "the same share" you hold.

 

[mrdoubleb]

I just talked to my Bank its Cortal Consors/ BNP Paribas. They said:

• A typical situation is that the public shares are transformed into private shares located at a US bank like Morgan Stanley who administrate and manage the affair for all stockholders.
• There is no barrier for international shareholders to transfer their shares unless the contract has terms to force them out
• Having the Bank or Account and/or Depot in Europe does not make a difference and you should be able to participate as US investors do
• Liquidity is only available at certain dates. As we know that will be with Tesla every 6 months
• About taxes: here in Germany the tax authorities have asked for payment of Abgeltungsteuer (25%) before and may do it in our case as well. They could and may consider this move as a buy and sell action.
  • There was a case lately where Google was forcing stockholders to switch their shares (different type) too where the stockholders in Germany opened a court case and won against the tax authorities. With the new regulation of a class action (Sammelklage) in Germany such a case could be a valid option to consider. The truth is that our shares are only transferred into private shares like a different type whereby there is no sell or buy nor any income or a speculative realized win.

I have some experience with this as I did own 50000 options at my former company and decided to buy the stocks whereby I was forced to pay income Tax although I did not get any income. At that time I considered this already as unfair and against the law but it was a not too high amount and decided not to open a legal case. I do not know if I ever will be able to sell them despite all the taxes I paid. Its a private company as well.

Thanks for sharing! I actually have a MS account in the US as my current company just started giving me some stock and they had one open for me. So if I can transfer there, that would be fairly painless.

But i did have a similar experience to yours when i decided to go long on Tesla and moved my shares from my standard account to the Longterm Investment Account (TBSZ) which is tax free as long as you keep your shares there for at least 5 years. I was forced to sell my stock from my standard account at market prices and buy them back on my new TBSZ 3 days later (it had to settle) incurring not only losses due to stock price changes, but also having to pay taxes on my wins when sold. Even though I`ve staid within the same brokerage and not a penny left my account. Literally moved the funds within my own accounts online.

 

[neroden]

If you own shares outright, in your own name, in an after-tax account, I am pretty sure you will be able to continue as a stockholder. At least unless there's some law against you owning private equity. There is a pretty straightforward procedure for this (it may amount to "stock certificate is issued to you").

The more problematic issue will be tax-preferred accounts of all sorts -- retirement accounts, British ISAs, The TBSZ mentioned my mrdoublez. I strongly suspect a lot of these will be subject to regulations prohibiting them from holding private equity.

 

[replicant]

Owner of TSLA shares in a French ordinary securities account (namely, Boursorama). The bank told me it is usually possible to convert publicly traded shares into shares of a private funds. I asked the French stock market regulator (AMF) and they told me that only US laws will apply regarding any conditions to own such shares in a private fund (cf. accredited investors discussions).

As for taxation, I presume that this will be neutral (just like the SCTY-TSLA merger) since the shares won't sold but only exchanged. I was able to vote on the merger proposal back in 2016 but had to asked my bank multiple times to get my ballots.

 

[NicoV]

As you may remember, I am also a keytrade customer. Will mail them too. I want too keep my Tesla shares when they go private, I assume you also want that. Maybe two customers inquiring on the same day may signal that they have to put some effort in there.
I’ve had previous experiences with them with a european company that issued rights for a capital increase and they handled everything by mail (for exercising my rights), so I’m hopefull they will be able to deal with this situation.

As expected, Keytrade answered that it’s too early to say anything about it.

 

[Gerardf]

Interesting thread, thanks for starting it !

I own my shares via a Dutch broker named "DeGiro" and it worries me that I could not vote.
Maybe the shares are registered on the name of "DeGiro"and not mine ? That could also give problems to stay shareholder in the private company.

I dropped them as question and will report back if I get an answer.

In the Netherlands I do not have to pay tax on the profit made on gains (we are taxed on a fixed % 'assumed' return / profit'. I would like to know if things will be transparent if one owns shares at a US broker instead. Can I assume I will only be taxed in The Netherlands ?

 

[Johan]

Interesting thread, thanks for starting it !

I own my shares via a Dutch broker named "DeGiro"and it worries me that I could not vote.
Maybe the shares are registered on the name of "DeGiro"and not mine ? I dropped them as question and will report back if I get an answer.

In the Netherlands I do not have to pay tax on the profit made on gains (we are taxed on a fixed % 'assumed' return / profit'.
I would like to know if things will be transparent if one owns shares at a US broker instead. Can I assume I will only be taxed in The Netherlands ?

You would definately be taxed according to the Dutch rules, as long as you live in the Netherlands and pay your other taxes there. There are bilateral agreements about these kinds of things, where the US IRS may inform the Dutch tax office of your holdings and trades, but you'd never pay taxes to the US government.

 

[RedSquirrel]

I just talked to my Bank its Cortal Consors/ BNP Paribas. They said:

• A typical situation is that the public shares are transformed into private shares located at a US bank like Morgan Stanley who administrate and manage the affair for all stockholders.
• There is no barrier for international shareholders to transfer their shares unless the contract has terms to force them out
• Having the Bank or Account and/or Depot in Europe does not make a difference and you should be able to participate as US investors do
• Liquidity is only available at certain dates. As we know that will be with Tesla every 6 months
• About taxes: here in Germany the tax authorities have asked for payment of Abgeltungsteuer (25%) before and may do it in our case as well. They could and may consider this move as a buy and sell action.
  • There was a case lately where Google was forcing stockholders to switch their shares (different type) too where the stockholders in Germany opened a court case and won against the tax authorities. With the new regulation of a class action (Sammelklage) in Germany such a case could be a valid option to consider. The truth is that our shares are only transferred into private shares like a different type whereby there is no sell or buy nor any income or a speculative realized win.

I have some experience with this as I did own 50000 options at my former company and decided to buy the stocks whereby I was forced to pay income Tax although I did not get any income. At that time I considered this already as unfair and against the law but it was a not too high amount and decided not to open a legal case. I do not know if I ever will be able to sell them despite all the taxes I paid. Its a private company as well.

I'm actually with the same bank. How sure are you the bank is able to handle the situation? From my previous discussions with them around voting I learned that Tesla doesn't know I'm a shareholder and Consors isn't able to provide certificates that I actually am one. I actually don't fear that non US residents can't stay shareholders. But I actually fear Consors isn't able to handle the situation well and will force me to sell the shares on the last trading day. That's why I'm considering of opening a US account (e.g. with Schwab) and transfer my shares there.

 

[aubreymcfato]

Owner of TSLA shares in a French ordinary securities account (namely, Boursorama). The bank told me it is usually possible to convert publicly traded shares into shares of a private funds. I asked the French stock market regulator (AMF) and they told me that only US laws will apply regarding any conditions to own such shares in a private fund (cf. accredited investors discussions).

As for taxation, I presume that this will be neutral (just like the SCTY-TSLA merger) since the shares won't sold but only exchanged. I was able to vote on the merger proposal back in 2016 but had to asked my bank multiple times to get my ballots.

I have a similar situation with Fineco. I was able to vote on the Solarcity merger (with just a few emails with the bank, actually, quite painless), and I voted for free. I asked to vote for the compensation package, they told me I could, for 79€ (I declined). So I hope there is a way for me to remain a shareholder: if I have to sell and re-buy, that would be a bloodbath.

 

[avoigt]

I'm actually with the same bank. How sure are you the bank is able to handle the situation? From my previous discussions with them around voting I learned that Tesla doesn't know I'm a shareholder and Consors isn't able to provide certificates that I actually am one. I actually don't fear that non US residents can't stay shareholders. But I actually fear Consors isn't able to handle the situation well and will force me to sell the shares on the last trading day. That's why I'm considering of opening a US account (e.g. with Schwab) and transfer my shares there.

Well BNP Paribas is a highly recognizes international bank and if they cannot handle the situation for whatever situation then I would be surprised.

In my today call with them they did not give any indication that this is an issue and have given me competent answers. So, I am unclear on what basis you are uncertain. Keep me posted on your Schwab approach anyhow.

I do have the same challenge with them about my voting rights and created some pressure. When you bought Tesla shares you also bought the voting rights and the AGBs from CC/BNP does not prevent you from executing the rights. Thats what they have given to me in writing. Stocks are normally at the Depot in Luxembourg called Clearstream. They supposed to give the me the number to do the voting but did not in the past.

The bank advisors then told me they do not know why I did not got the transaction number and suggested that I transfer my Stocks from Luxembourg to a Depot in the US hoping that will help. I did that and they covered the costs understanding that something is wrong here. Now I still did not got a number last time and have asked them again to investigate and make my voting possible today.

I suggest writing a clear mail to them or call them that they are legally responsible for making sure you can execute your rights as a shareholder. Their behavior is as of my understanding against the German Stock law. So keep pushing in my case they at least try to help. The underlying issue though looks to me more with the clearing partner.

My basic rule is that I don't trust bankers so being paranoid is not bad in such a situation. I would hate have to sell a single stock and do whatever needed to avoid it.

 

[eepic]

For Canadians, private US companies are not eligible for our RRSP nor TFSA accounts. I started a thread here about that "Going Private = Forced Liquidation" for many Investors

Interestingly, according to Bloomberg only about half of TSLA holdings are confirmed in the US. If you exclude Elon's 20%, the majority of all other investors would actually be non-US so this probably affects quite a lot of people.

Top Geographic Ownership (%):
UNITED STATES 53.47%
Unknown 21.72%
UNITED KINGDOM 12.08%
HONG KONG 5.26%
CANADA 2.37%
JAPAN 2.30%
GERMANY 0.74%
SWITZERLAND 0.75%
NORWAY 0.51%
NETHERLANDS 0.21%
LUXEMBOURG 0.16%

 

[Runarbt]

I havent read the entire thread yet, but have stock in netfonds.no and options at schwab.

netfonds says i can transfer the stock (3-5 days) without realising the gains/ taxing, as long as both account is in my own name.

checking with schwab to confirm from their side, and get the transfer account data correct.

then i will just transfer i think.. ;-)

 

[avoigt]

For Canadians, private US companies are not eligible for our RRSP nor TFSA accounts. I started a thread here about that "Going Private = Forced Liquidation" for many Investors

Interestingly, according to Bloomberg only about half of TSLA holdings are confirmed in the US. If you exclude Elon's 20%, the majority of all other investors would actually be non-US so this probably affects quite a lot of people.

Top Geographic Ownership (%):
UNITED STATES 53.47%
Unknown 21.72%
UNITED KINGDOM 12.08%
HONG KONG 5.26%
CANADA 2.37%
JAPAN 2.30%
GERMANY 0.74%
SWITZERLAND 0.75%
NORWAY 0.51%
NETHERLANDS 0.21%
LUXEMBOURG 0.16%

Thats interesting and may explain why many international holder cannot execute their voting rights. Somehow the clearing partner do not report back to the US who own the stock in their depot or the bank not to the clearing partner therefore they are not visible in the US which accounts for 21.72%. This is huge!

This is a violation of shareholder rights. Maybe its a cost issue or they just don't care and people just accept it and knowbody made them liable.

Can you explain RRSP and TFSA? Here in Europe we discuss quite normal depots and banks and brokers and wonder what the effect will be.

 

[Muaddid]

I always get the letters to vote for my shares in RRSP and TFSA...

 

[jbih]

Regarding both votes and my shares becoming private, does it matter if I bought my shares at NASDAQ or at Xetra? If yes, can I move them? I currently bought all my shares at Xetra.

 

[Tslynk67]

As expected, Keytrade answered that it’s too early to say anything about it.

At least you got an answer, nothing on my side yet. I guess you have a larger position, so get priority

 

[neroden]

RRSP and TFSA are retirement and "tax preferred" accounts in Canada. Similar problems seem to arise with "ISA" accounts in the UK, 401(k) accounts in the US, etc.

 

[neroden]

Regarding both votes and my shares becoming private, does it matter if I bought my shares at NASDAQ or at Xetra? If yes, can I move them? I currently bought all my shares at Xetra.

Doesn't matter where you bought your shares. Matters where your shares are currently held (what broker, or by "direct registration")

 

[replicant]

Owner of TSLA shares in a French ordinary securities account (namely, Boursorama). The bank told me it is usually possible to convert publicly traded shares into shares of a private funds.

Update: Boursorama confirms that it will be possible to held shares "en titre papiers" (aka Over The Counter, which differs somewhat from "titres non côtés" that don't exist in the US). They recommends to contact Tesla in due time to know about the conditions to convert (i.e they don't know the specifics, e.g requirement to be accredited).