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

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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