Thanks for your post, sounds to me as the source you describe is also the source that the individual banks get their info from? I find it always hard to tell on a forum who is actually in the know as many people are often just acting that way, but sounds to me you know more than you get credit for (which would also explain why many posts following yours report the same info from different brokerages). Maybe you can explain what Clearstream does exactly...
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Stock split tax implications for non-US shareholders
- Thread starter junas
- Start date
Thanks for your post, sounds to me as the source you describe is also the source that the individual banks get their info from? I find it always hard to tell on a forum who is actually in the know as many people are often just acting that way, but sounds to me you know more than you get credit for (which would also explain why many posts following yours report the same info from different brokerages). Maybe you can explain what Clearstream does exactly...
no prob, no worries...
Clearstream bank is depo that handles clearing for trading venues in germany. they have frankfurt and luxembourg. they are a CSD (central securities depository)
- basically same as DTCC is to US markets
- euroclear/Crest for u.k./ireland, french markets
- etc etc
the depos hold all the settled stock that trades on exchanges within their market venue
dtcc settles stock for all US trading (nyse/arca, bats, nasdaq, etc etc) but not until it passes through NSCC from T to T+ 1. on t+2 it either settles or it fails. dtcc also provides a litany of other services
europe is fairly de-centralized so it doesn’t have 1 NSCC equivalent but each market has its own CCP (central counterpart)
in this case EuroCCP tracks T and T+1 while Depo (CBF and CBL) accounts for the settled position
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for corp actions, what happens is:
- the company makes the announcement
- there are corp action data vendors:
Bloomberg, SIX (telekurs), Mediant, etc
also,
Exchanges sell corp action data along with market data and other stuff
the depositories themselves also disseminate this data to their market participants (dtcc corp action data is ‘free‘ but not really, it’s bundled with all the clearing stuff that brokers pay gobs of money for every month)
...in europe places like CBF and Euroclear use swift messages to disseminate the data, (usually at added cost)
- the core corp action vendors (Bloom, Six are amongst the largest) have programs and/or staff that read the sec docs and press release, scrub and field the data, and create an ‘announcement’
- basically everyone subscribes and pays for the top corp action vendors; brokers, funds, depos, exchanges, the banks,
- then some of those like dtcc or CBF will make their own announcement from that data, and disseminate
therefore a broker will receive numerous announcements for tesla’s split from all the ‘sources’ it pays for, directly or indirectly.
the broker then has corp action operations staff / and hopefully a smart and well built system that also scrub all these announcements to fit into one ‘event’ in a db that is responsible for all the key critical criteria needed to for ‘posting’ the event accurately to its ‘customers’ that hold tesla as of the ex date
but that’s why it’s important to read all of the banks’ SWIFT messages and the original source announcements, because there’s often a human entering some info somewhere and is subject to error. i never saw a tax implication on a standard forward split such as this, but i’m not a tax expert that knows every country’s quirks
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Just received a horrible response from my brokerage house (Questrade)
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Thanks for contacting Questrade. My name is Alfred and I’ll be happy to help you.
I apologize for the late response as we have been experiencing an increase in volume recently.
You are correct that Tesla's stock split will be treated as a stock dividend and thus potentially being subjected to withholding taxes.
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I’ve asked “Alfred” to escalate back to their tax team as the response makes little to no sense from a Canadian tax perspective.
@Artful Dodger @Tes La Ferrari
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Thanks for contacting Questrade. My name is Alfred and I’ll be happy to help you.
I apologize for the late response as we have been experiencing an increase in volume recently.
You are correct that Tesla's stock split will be treated as a stock dividend and thus potentially being subjected to withholding taxes.
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I’ve asked “Alfred” to escalate back to their tax team as the response makes little to no sense from a Canadian tax perspective.
@Artful Dodger @Tes La Ferrari
Artful Dodger
"Neko no me"
Advice: don't look for problems where there are none. You'll sleep better. k
Tes La Ferrari
Active Member
Biproduct of the profession. Overthink and contingency plan constantly. I do think “Alfred” is just reading from a script and doesn’t actually know the answer.
It’s Canada leading online/discount brokerage. https://www.questrade.com/about-us/who-we-are
I would ask the same of my RBC “advisors”, but to your point, they have zero clues.
Same here, I'll probably hold, looking at what the Finnish tax code states on stock based dividend vs a stock split I would think it's much harder to argue the case of dividend payment in the form of shares than it is to argue the case that this is a split through means of dividend.
Still not 100% relaxed about it but on the positive side, the increase post stock split has more than offset the possible tax costs
Still not 100% relaxed about it but on the positive side, the increase post stock split has more than offset the possible tax costs
stef
Member
Same thinking ... holding.Same here, I'll probably hold, looking at what the Finnish tax code states on stock based dividend vs a stock split I would think it's much harder to argue the case of dividend payment in the form of shares than it is to argue the case that this is a split through means of dividend.
Still not 100% relaxed about it but on the positive side, the increase post stock split has more than offset the possible tax costs
Thanks. So do you think we can assume that Clearstream consulted with national tax authorities before releasing the info the split is a non-taxable event? Is this message authoritative to the brokers or is it possible they might still wait for info directly from the tax authorities?
the vendors and next tier data providers disseminate as it comes, so they may update each event a few times. so it’s possible any tax authority data comes more towards the effective date of the event.
that said, it’s really hard to tell, unless you know tax code for the venues in question. anecdotally, none of my european broker contacts have ever seen a forward split like aapl or tsla’s be taxed in european venue. although none of them can state technically or legally why they don’t get taxed. (where i have said in past that a split isn’t an income event - yet i can’t cite the tax code by venue)
TimothyHW3
Active Member
Doesn't matter (if the price is the same, could be higher next week though). Either way you are out of 4 additional shares. The way this thing works: whoever holds on the 21st is entitled to the stock. If he sells on the 22nd, the person getting the stock also gets the entitlement. The 21st is just so that Tesla has enough time to figure out who should they transfer the stock to and the 22 to 31st is the time that basically any sold stock will be transferred to the new person.
This is a text excerpt from my bank letter (see below):
What does that mean for me now? If you have shares of Tesla Inc. in your portfolio at the end of the 28.08.2020, you will receive 4 additional shares for 1 original share. The additional shares will be booked automatically and free of charge for you on 31.08.2020. So you do not need to worry about anything.
What are the tax implications for me? According to our current information, the split will be tax neutral. This means that you do not have to pay any tax on the registration of the new shares and the acquisition costs of your shares will be split on the new total number of shares.
FWIW, my bank/broker (Nordea) says it does not know anything about this and it will not give any advice whatsoever relating to a foreign stock, and that it's my responsibility to figure out what it all means. Oh well, they *are* known for their bad customer service, after all.
jeewee3000
Active Member
Lol, that's truly poor customer care.
I assume it is the cheapest broker you can find for you to tolerate that attitude?
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