ADR Fees: 5 Additional Important Facts To Be Aware Of

One of the factors that investors in ADRs have to consider is the ADR Fees. This fee is charged by the depositories of the ADR program. My earlier articles on ADR fees were well received by this site’s visitors. You can find those articles below:

While those articles covered many facts about this fees, in this article I will list five additional important facts to be aware of. As the tax filing season is underway for US residents, investors may be wondering about how to deal with this fees may find these points helpful.

1.How often is the ADR Fee charged?

Usually the ADR fee is assessed once in 12 months or annually by the depository.

2. Can I include the ADR fee I paid to the purchase price of an ADR and calculate the cost basis?

Nope. You cannot add ADR fee to the cost basis.

3. How are ADR fees collected?

The depository will collect the fees based on the record date of the investor holding the ADR. For dividend paying stocks, the broker will deduct this fees from any dividends received and send it to the depository.

4.What if my ADR does not pay a dividend? How will I pay this fee?

If your ADR does not pay any dividends, then the ADR fee will be deducted from your cash portion of your account. So it is wise to hold some cash in the account.

5.Which ADRs are subject to ADR Fees?

Visit the depository sites to check if the ADR fee is applicable to the ADR you own.

BNY Mellon:

https://www.adrbnymellon.com/fees-and-disclosures/depositary-service-fee-info

Citi:

https://depositaryreceipts.citi.com/adr/guides/dsf.aspx?pageId=8&subpageid=190

Deutsche Bank:

https://adr.db.com/drwebrebrand/dr-universe/depositary-service-fee-list

 

5. Can I deduct 1099-DIV ADR fees in my tax returns?

Nope. You cannot deduct this fees in taxes. Investment expenses are no longer deductible in Federal tax returns.

ADR fees paid in qualified retirement accounts also cannot be deducted in taxes.

So the key takeaway for ADR investors is that ADR fees should be considered as another expense for investing in foreign stocks.

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5 Comments

  1. Can you sell before the record date to avoid the ADR fee? I recently sold a stock day before the record date, but still got charged for the ADR fee by TD Ameritrade. I sent them the screenshots showing the sell and the record date published by Citi, but said that they have no control over it.

  2. Oh really. That is not right.
    Yes. TDA does not have control over it but what Citi did was wrong. They were not supposed charge the DSF fee if you sold before the record date.

    Here is an example from their own site:
    Ticker Symbol: BNR
    CUSIP Number: 12233L107
    US ISIN: US12233L1070
    Country: China
    Listing Exchange: NASDAQ
    Ratio (ORD:DR): 1:1
    Security Type: ADR
    Program Type: Sponsored
    DSF Record Date: 4/8/2022
    DSF Billing Date: 4/22/2022
    Rate Per DR: $0.020000 (per ADR held)

    So if someone sold before the DSF record date of 4/8 then they won’t be charged the fee.

    Source:
    https://depositaryreceipts.citi.com/adr/guides/dsfann.aspx?cusip=12233L107%20&recdate=20220408

    You can reach out to Citi and see what they say.
    Contacts:
    Questions may be directed to: Marc Mayo 973-461-7015 or Keith Balwan 973-461-7038
    Email [email protected]

    Thanks

  3. Buenos días ,soy accionista de dos compañías las cuales mi broker actual no me brinda una gestión eficiente, por lo les solicito informacion para poder velar por mis intereses de una manera profesional . Comentarles que el primer valor es Petrochina que en la actualidad está en un proceso de conversión de sus ADRs y la segunda es Ferro Nordic ,esta ultima bloqueada según citi por problemas coyunturales.De la primera les remito la solicitud de exclusión de la cotización de los ADS de Petrochina (PTR) ,el comunicado del depositario BNY Mellon y el de la OCC.
    También el correo que me envió BNY Mellon informando de cómo proceder y los tiempos para ello .Por último también el de mi corredor bursátil actual .
    Por lo que puedo entender la fecha de terminación del programa de ADR fue el 16/10/22 momento que dicho activo se deslista en el NYSE pasando las acciones subyacentes a listarse en el mercado extrabursátil OTC US. ( PCCYF).En esta situación mi broker me informa que debo vender o traspasar dichos ADS ya que ellos no actúan en el mercado asiatico (Hong Kong ).Aun así entiendo que la informacion es erronea ya que segun los terminos del acuerdo del Depositario dispongo varias opciones según mis intereses ,siendo yo como titular el que solicite las mismas y mi corredor el que las gestione, El mecanismo de conversión de los ADR finaliza el 17/10/23 por lo que les solicito informacion a ustedes para saber si dicha conversión en acciones subyacentes y posterior custodia de las acciones ordinarias pueden realizar , así como la posterior gestión de los activos en los mercados de origen y los costes de los mismos .
    A continuación le indico los datos :

    Petrochina como tenedor de ADS ISIN US71646E1001 CUSIP 71646E100
    Petrochina com compañia subyacente ISIN CNE1000003W8

    Ferronordic ISIN SE0005468717 CUSIP W3363S132

    Me pueden ayudar para saber como proceder ,a quien puedo trasferir estos dos activos ?..que ejecuten la conversación o venta en el mercado OTC y de ferronordic que me de cobertura en Estocolmo , gracias

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