BUD

[Dividendsrule]

I don't know you guys, this is looking mighty tasty to me right now.

I looked at it back in the day, like when it was recently acquired, and I got turned off because I didn't know what was going on with management etc. 

https://en.wikipedia.org/wiki/Anheuser-Busch_InBev

I'm seeing impressive dividend growth, more acquisitions, and now rumors that they might acquire KO (Silly rumors, but it could happen because of the 3G connection- Jorge Lemann was behind the AB Inbev thing and he is good buddies with Warren Buffett who owns over 10% of KO)...Why should I not be buying BUD hand over fist?

[Roadmap2Retire]

I havent really looked at it - but have you considered the tax implication?

One major factor that stops me from investing in some international companies are the taxes. BUD is headquartered in Belgium, so you will be paying withholding taxes on the dividends.

[Dividendsrule]

CRAP. OK...That is much needed cold water, thanks. Really? How disappointing.

Poop.

"Under the income tax conventions between the United States & Belgium and Canada & Belgium, United States and Canadian residents are eligible for reduced Belgian withholding tax (for most people, at a rate of 15% rather than the standard 25%)."

Anyone know if there is withholding taxes on ADRs in IRAs?

[Dividendsrule]

Sorry guys, confirmed with Bank in NY who does their ADRs.

Withholding tax of 27%, if claimed with paperwork, withholding tax is 15%. Even in IRAs.

Only exemption is in 401s and pension plans.

That's a bummer. I'll probably just keep my small position for the capital gains, they will probably be a beast going forward.

[Kerim]

Can someone who actually owns some BUD walk me through how this works?

Here's my rudimentary assumption: They issue the dividend in euros, withhold X percent in the case of shares associated with ADRs, convert to USD, and that's my dividend? Which, if I hold the ADR in a taxable account, is then subject to my regular US taxes?

I've read that the "X" in the equation above is 15 percent in the case of US and Canadian residents. If that is correct, do they simply withhold that 15 percent? Or do they take 27 or 30 percent, and then I've got to add paperwork to my taxes to "claim" the difference?

Thanks!

[ChadR]

I don't own BUD, but this is how it should work. It should be withheld at the 15% and then you can get to file the foreign tax credit forms to get a credit for taxes withheld.

[crimsonghost747]

I do not live in the USA nor do I hold BUD but here are some general things I've learned along the way, almost all of my shares are from abroad so I have a pretty good feel for these.

So a company pays you a dividend of X amount in whichever currency they use. They will deduct the withholding tax, the amount of this tax depends on the tax treaty between the country the company is registered in and the country you live in. The treaties vary, so check carefully what the deal is. USUALLY in western countries it's that 15% stays in the country the company is registered in. They take care of giving the withholding tax to the appropriate government and pay you the remainder in the currency which they use, it's up to your bank/broker to change it to your preferred currency. Careful here again as your bank might have slightly different rates than the real one. When it comes time for you to do your taxes, you can claim that you've paid tax abroad and that will be taken into account.

So, something along these lines for taxable accounts:

Company A issues a dividend of 10e.
They pay 1.50e to their government and send you 8.50e.
Your broker might keep it in euros or change to $. Up to you to negotiate what you want.
Tax time: you claim that you've received a dividend of 10e and that 1.50e has been withheld by country X. You'll probably need to provide these details to your tax dude in local currency using the official daily rates of the transaction, which might lead to a bit of an excel nightmare if you receive a lot of dividends in different currencies.

[Kerim]

That's super helpful -- thanks!

So when you're calculating the current yield of such a company, I suppose best to use the reduced amount (that is, net the 15 percent), and just do your best to rough guess the currency conversion.

[fenders53]

(10-30-2018, 10:45 AM)Kerim Wrote: That's super helpful -- thanks!

So when you're calculating the current yield of such a company, I suppose best to use the reduced amount (that is, net the 15 percent), and just do your best to rough guess the currency conversion.

That's what I would do, then swing the guess 10% unfavorable in case there are currency conversion shenanigans later.  That should yield a good enough number to make a decision from.

[crimsonghost747]

(10-30-2018, 10:45 AM)Kerim Wrote: That's super helpful -- thanks!

So when you're calculating the current yield of such a company, I suppose best to use the reduced amount (that is, net the 15 percent), and just do your best to rough guess the currency conversion.

Well, I'd suggest finding out your own taxation laws and then make the calculations based on that. If it's a 401k or some other one where the divs are not taxed at all, then it might be what you described. I don't know if you can use the taxes as deductions at a later date. Or even deduct them from something else.

Personal example: it's all the same whether or not there is a withholding tax. I buy from states, I pay 15% withholding to USA and then I get taxed another 15% at year end by my own country. If there is no withholding, I'll just pay 30% at year end. With local stocks the withholding is 30%. It doesn't matter for total income, I'll end up paying the same, only difference is when the money actually leaves my account.