It's confusing and I'm trying to wrap my head around it.
Maybe I'm misunderstanding it, but here it goes, please correct me if I'm wrong. As you can guess I'm no tax or stock expert lol.
In the United States you have two different shares of Royal Dutch Shell:
RDS.A shares, with dividends subjected to a 15% Dutch tax withholding
RDS.B shares, with no tax on dividends
Now, if you own these shares in a brokerage account I don't believe it much matters in what stock you buy because you can get that 15% Dutch tax back by filling out the proper paperwork with the IRS, i.e., foreign tax credit. Of course, our government expects you to pay the proper taxes when due whether cash received or divi's reinvested. I guess this falls under choose your poison!
Now, there is a Scrip Program that a shareholder can sign up for that will greatly benefit the shareholder. When signed up, the Scrip Program allows the shareholder to receive divi's exempted from the 15% Dutch tax withholding. However, one has to remember the United States expects the shareholder to still pay their proper taxes due, in other words, the Scrip Program does not exempt you from the United States tax system. Even with divi's reinvested will not be considered tax deferred because shareholder has a choice to receive divi's in cash. But remember, entering the Scrip Program you are agreeing to reinvest your divi's while participating in the program, the shareholder agrees not to receive the cash.
All divi's will be re invested in RDS.A shares not RDS.B shares, this is where owning at least ONE FULL SHARE of RDS.A is important! All fractional shares will be sold with proceeds deposited into your settlement account.
If the rules did not change there is a LOOPHOLE.
Buy shares in a RETIREMENT ACCOUNT and make sure you are signed up in the Scrip Program in order to take advantage of not paying 15% Dutch tax on your divi's. If you are not signed up in the Scrip Program you will pay the 15% Dutch tax and loose that money FOREVER because the United States does NOT ALLOW the shareholder to benefit from the FOREIGN TAX CREDIT when owning such a stock in a retirement account. Participating in the Scrip Program when holding Royal Dutch Shares in a retirement is the tax loophole. I believe the shareholder has to fill out the proper paperwork for both RDS.A and RDS.B shares. Remember, all divi's have to be reinvested and all divi's will be reinvested in RDS.A shares even if you own RDS.B shares.
If one doesn't want to participate in the program anymore, i.e., wants to receive the divi's in cash instead, simply sell your RDS.A shares (tax free), and keep your RDS.B shares but change the cash/reinvest option.
In order to sign up for the Scrip Program contact your respective brokerage.
Confusing? You bet!
Now, like I said if I'm wrong just kick me in the balls then correct me.
See link below
http://s01.static-shell.com/content/dam/...s-2015.PDF
Maybe I'm misunderstanding it, but here it goes, please correct me if I'm wrong. As you can guess I'm no tax or stock expert lol.
In the United States you have two different shares of Royal Dutch Shell:
RDS.A shares, with dividends subjected to a 15% Dutch tax withholding
RDS.B shares, with no tax on dividends
Now, if you own these shares in a brokerage account I don't believe it much matters in what stock you buy because you can get that 15% Dutch tax back by filling out the proper paperwork with the IRS, i.e., foreign tax credit. Of course, our government expects you to pay the proper taxes when due whether cash received or divi's reinvested. I guess this falls under choose your poison!
Now, there is a Scrip Program that a shareholder can sign up for that will greatly benefit the shareholder. When signed up, the Scrip Program allows the shareholder to receive divi's exempted from the 15% Dutch tax withholding. However, one has to remember the United States expects the shareholder to still pay their proper taxes due, in other words, the Scrip Program does not exempt you from the United States tax system. Even with divi's reinvested will not be considered tax deferred because shareholder has a choice to receive divi's in cash. But remember, entering the Scrip Program you are agreeing to reinvest your divi's while participating in the program, the shareholder agrees not to receive the cash.
All divi's will be re invested in RDS.A shares not RDS.B shares, this is where owning at least ONE FULL SHARE of RDS.A is important! All fractional shares will be sold with proceeds deposited into your settlement account.
If the rules did not change there is a LOOPHOLE.
Buy shares in a RETIREMENT ACCOUNT and make sure you are signed up in the Scrip Program in order to take advantage of not paying 15% Dutch tax on your divi's. If you are not signed up in the Scrip Program you will pay the 15% Dutch tax and loose that money FOREVER because the United States does NOT ALLOW the shareholder to benefit from the FOREIGN TAX CREDIT when owning such a stock in a retirement account. Participating in the Scrip Program when holding Royal Dutch Shares in a retirement is the tax loophole. I believe the shareholder has to fill out the proper paperwork for both RDS.A and RDS.B shares. Remember, all divi's have to be reinvested and all divi's will be reinvested in RDS.A shares even if you own RDS.B shares.
If one doesn't want to participate in the program anymore, i.e., wants to receive the divi's in cash instead, simply sell your RDS.A shares (tax free), and keep your RDS.B shares but change the cash/reinvest option.
In order to sign up for the Scrip Program contact your respective brokerage.
Confusing? You bet!
Now, like I said if I'm wrong just kick me in the balls then correct me.
See link below
http://s01.static-shell.com/content/dam/...s-2015.PDF