"
...The mystery is solv-ed."
I saw, upon receipt of the scheduled NHYDY dividend some time ago, that 25% of that dividend was "withheld at the source." (And there was also a "depositary service fee" I got dinged for, which was just $7.28.)
....Then just the other day, I bumped into a Seeking Alpha article re: NHYDY asserting that the Norwegian withholding tax was 15%. ... So, I sent a message, asking my broker (TRP) about it.
Come to find out: NON-NORWEGIANS are subject to
25% withholding. (From the company's own website---so TRP informs me.) That fact sucks mountains of mud. But life is full of stinky surprises. "Life sucks, and then you die." What the hell, right? The stock has been falling along with the rest of the Market. Yet now that I finally have clarity about the withholding issue, I believe I will stick with it. Aluminum and green energy. And lately, I just read that the company has joined with the Norwegian Church Fund to create a
solar power company.
That might sound strange. But I understand, for example, that Germans pay taxes to support the churches, whether or not they belong or attend. Must be something similar.
And that's all I have to say about that. ----Forrest Gump.
Comments
https://seekingalpha.com/article/4633977-we-expect-lower-earnings-from-aluminium-giant-norsk-hydro
From the company's own website: https://www.hydro.com/en-US/investors/information-for-shareholders/taxation-guide/
Perhaps you are ineligible for the lower rate because you hold the company indirectly via an ADR? I don't know. If you are eligible, it seems that you have to file some paperwork to get the 15% rate. Continuing from the company's website: I imagine that you may be eligible for a dollar-for-dollar reduction in federal taxes (foreign tax credit) up to your tax rate. But this is not something I delve into too deeply.
I ran across this page that does a pretty good job of going through the issues above. Coincidentally, it uses a German company (SAP SE) as an example.
https://einvestingforbeginners.com/adr-dividend-tax/
Capacity to produce such by-products from ordinary smelting activity has declined around the globe due to Chinese subsidies to its domestic producers over preceding decades.
Now China is restricting the export of these materials, as if that wouldn't create a market for companies like Norsk Hydro to get back into processing them.
Getting back to the OP, Crash's Norwegian taxes may be supporting the efforts of the Norwegian Seamen's Mission.
@msf I will follow up on that. Great information. THANK you! (Yes, that's the S.A. article I was reading. ) I'm disappointed now, that TRP did not go just one step further and inform me of what YOU told me, above.
*Edit: I just sent an email to that email address provided by "Hydro" in order to request the withholding exemption. We'll see what happens next. .....
PS - My understanding is that if you own a mutual fund having part or all of its assets in these countries, the tax paid by the fund is hidden away in “other expenses” so that most investors probably don’t realize they’re paying it. No free lunch.
https://www.irs.gov/pub/irs-pdf/f1040s3.pdf
https://www.irs.gov/pub/irs-pdf/f1040s.pdf
Mutual funds can always treat taxes the same as office expenses, manager salaries, etc., i.e. as expenses that reduce returns, much as hank described.
Alternatively, they may be permitted to treat foreign taxes as expenses you are responsible for. This is a part of a legal fiction where they add those foreign taxes to your actual (hard cash) divs on the 1099-DIV, but also say that instead of handing you that cash they are paying those taxes on your behalf. That lets you declare the foreign taxes as your expenses, rather than as the fund's.
Most funds paying foreign taxes don't do this. Many supposedly domestic funds have a little bit of foreign investment on which they may be paying foreign taxes - you never see this on your 1099s. Even many global funds don't do this, often because they don't legally qualify.
In order for a fund with foreign exposure to pass through a foreign tax credit, it must elect to do so (26 U.S. Code § 853), it must have over 50% of its value at end of tax year in foreign companies (§ 853(a)), and it must meet technical requirements of § 852(a).
Here's how the IRS describes this:
https://www.federalregister.gov/d/E7-16737/p-17
NO RESPONSE yet. Dotcha just love dealing with bureaucracies?
NHYDY. Up +0.26%.
That same link advises that in order to apply for the refund on overpaid taxes, I must create a user name and set up a bloody account with the Norway tax authority, and jump through way more hoops than any of this is worth. So, I just won't be adding to my NHYDY position. When the share price rises sufficiently out of the red ink, and perhaps after NEXT year's dividend arrives, I'll exit NHYDY.
...Now, let's see what happens with Tenaris: HQ in Luxembourg....... (TS.)