Hi
Please link if there’s already a thread for this. From a beginner’s perspective, I’m interested to know if it’s worth buying foreign stocks for Nordea’s OST?
Almost all guidelines advise sticking to Finnish ones. How does the taxation of foreign stocks work and why shouldn’t they be bought for an OST?
The novice is asking again.
As far as I understand, the withholding tax on dividends from companies not listed on the Finnish stock exchange cannot be reclaimed, unlike with an AOT (Arvopaperisäilytystili / Securities Account). More detailed information on this can be found on Google; I won’t speculate further on it.
My understanding is that one could safely buy foreign companies on an OST (Osakesäästötili / Share Savings Account) if they do not pay dividends. So, a growth company that doesn’t pay dividends could be perfectly viable? Wiser people, please correct me if I’m wrong.
A pure dividend stock, from which withholding tax is deducted, should not be bought for an Equity Savings Account (OST). If the dividend is only a small portion of the total return, then an OST might be the right choice. Foreign stocks also have other, albeit smaller, problems with an OST. Since an OST does not allow for a foreign currency account, purchases/sales/dividends/capital repayments cause automatic currency conversions. Depending on the bank, this can be significant. At least Nordea’s exchange rate has been criticized in connection with dividends.
Traditionally, it’s not advisable to buy foreign dividend-paying stocks for an OST (Osakesäästötili/Share Savings Account), but there are exceptions, such as companies registered in Britain, because the dividend withholding tax in Britain is 0%. A similar situation applies to companies registered in tax havens like Bermuda.
This was new information to me. In Britain, a quick look reveals some quite interesting dividends available (around 10%). Is there some pitfall that an investor looking for tax-free dividends in an OST might fall into?
Also, can you recommend a good website that provides free figures and forecasts for British companies?
Bringing this topic up. Is dividend withholding tax the only reason to be wary of foreign stocks? Analyses and recommendations for foreign companies can be found at least on Simply Wall St and Investing.com. I also check analyses and recommendations for Finnish companies from there and compare them to Inderes and other sources if I find any.
Due to the lack of foreign currency accounts, I have thought about only holding Euro-denominated shares on my Investor Savings Account (OST). So far, it has only held Finnish and German shares. For foreign shares, I try to monitor when they pay dividends and sell them before the ex-dividend date. (The German tax authority withholds too much, and I don’t want their dividends in my OST anyway.) I aim to trade in batches large enough that the trading costs are 0.08 percent, so that the cost of avoiding taxes remains reasonable.
Only about a quarter of my investment assets could be placed in an OST, so it’s not a problem for me to keep USD and SEK-denominated stocks in a regular investment account (AOT).
Everyone does what they see fit. As someone allergic to fees, I have opted for such a solution. The easiest way is to stick to domestic stocks, but there are more options abroad, and over-optimizing in investing often backfires. So, if there is a good foreign investment at a suitable price, you can buy it for your OST, but it’s good to be aware of the account’s limitations.
The withholding tax is compensated by the Finnish tax authorities, and you won’t pay double tax if the shares are in a book-entry account. Of course, the company’s domestic tax treaty must be in order, and the broker must fulfill its obligations correctly. With Nordnet, foreign dividends from Sweden, the USA, and Canada, at least, are processed correctly without additional costs. You can find a complete list and clarification here:
Foreign dividends are actually slightly better because domestic dividends are taxed fully immediately. For foreign dividends, you get about a year of payment time for the final tax.
Thanks, good info. So, foreign companies have many businesses that increase dividends every year. It’s certainly good to be able to trust steady growth in dividend income to some extent, but in the examples in the link, they were still very small, less than one or two percent. Shouldn’t dividend-yielding companies be diversified in the same way as other companies, so that there are always a few high-dividend companies (in Finland, e.g., Telia, Sampo, Titanium, etc.) and a few offering steady or growing but smaller returns (Kone, Neste, Revenio) in the same portfolio? And similarly for foreign companies. I hope this hasn’t gone too off-topic yet.
So how does French dividend taxation work? France levies 25% on dividends, and I was thinking of buying these into an investment savings account (OST) to hold, so when I sell them someday, I’ll pay 30%?
And one more question, through what channel should I buy British American Tobacco, Xetra or London or where…?
In France, you only pay tax on profits when you withdraw the money, meaning no tax is due yet at the point of sale. Finland has a tax treaty with France, so no withholding tax should be applied, but it seems the French don’t care about this and still withhold taxes.
Is this information still current?
I’ve been under the impression that Sweden, USA, UK, and Canada are okay, but I’m a Nordea customer. I just checked Enbridge’s latest dividends, and the withholding tax has been 25%. So only 15% should have gone, and the rest in final taxation? My portfolio also includes Scotiavank and REITs from Canada, which I’ll sell immediately on Monday if I have to pay double taxes with Nordea.
I couldn’t find help for this on the tax authority’s website; it seems to be in order. I’ve sold my Norway, Germany, Belgium, and France holdings, as I don’t want the paperwork for a few hundred euros in dividends.
Please clarify for the uninformed if my suspicion is correct/if there’s no need to worry about double differences as a Nordea customer?
@Sentinvenyttaja
Yes, quite current info with that caveat. I don’t know about Nordea’s practice, but I doubt they handle things correctly, at least not automatically.
Hi,
Do you have any factual information on whether OP handles the taxation of foreign dividends correctly, for example, with Canada?
Also, I’d be interested to know how taxation works with the United Kingdom. Does Finland have a functioning tax treaty with them?
I’m looking at Telefonica, a deep value play, based in Spain. Does anyone have experience with dividend taxation from Spain? I have an account with Nordnet.
Here, someone says it should work correctly:
With the following countries, Finland has a working tax treaty. I especially recommend these countries for investors interested in dividends, to save time and mental health.
Spain
Netherlands
United Kingdom
Canada (exceptions)
Malta
Sweden
Finland
Czech Republic
United StatesAccording to this, the Canadian exceptions mainly concern banks:
In addition, problems may arise with certain banks (e.g., Nordea) if you own Canadian shares, as you have to fill out separate papers with Nordea (and pay for this pleasure) for the Canada-Finland tax treaty to be applied correctly. So, if you absolutely want Canadian dividend shares, I recommend opening a nominee account with Nordnet for this purpose, where taxation will be correct automatically.
In addition, the article’s comments brought up:
Furthermore, there is a problem with the OS account and PS account that Sweden, USA, etc. also withhold 15%, even though the withholding should be 0% on these accounts. So, among foreign dividend payers, only the UK is suitable for these accounts, because the UK’s withholding is 0%.
Even a limited company has withholding, even though it should also be 0%. A limited company gets the contractual 15% back from the Finnish tax authorities by filling out tax form 70. Why don’t private individuals have this option?
So, in practice, it is not worth buying foreign dividend shares for an OST. This is warned about in almost all articles about OSTs 
And apparently, taxes on Dutch dividends go wrong if you buy a Dutch company listed on the US stock exchange instead of a local one.
OP apparently gets the Canadian taxes right. There was some talk about this a moment ago in the REIT thread, where someone had sure knowledge of this.
In Britain, dividend taxation is 0%, meaning that if a company (or a share series) is registered there, no dividend tax is incurred. An example of this is Shell’s B-series share (A-series registered in the Netherlands, B-series in Britain). These are also suitable for OST.
Let’s ask here. I tried to find information online but couldn’t really find a consistent answer. So, what are the tax implications regarding capital gains tax from Canada when positions are held in a a “savings account for securities” (OST)? In the United States, the so-called capital gains tax changes if the ownership is old enough. I believe it was around a year. In that case, one must practice selling/buying according to FIFO if one wants to minimize their taxes. Are there any experts here?
I assume you are a generally liable taxpayer in Finland. Stock disposals are treated the same way within a stock savings account regardless of the company’s country of origin. If you are a limited taxpayer, you can refer to section 13.3 in particular in the following guide:
I need advice on reporting taxes for the Revolut app. I had thought that I would get a similar report at the end of the year, like one gets from Finnish banks’ investment funds, showing capital gains and losses. It turned out that Revolut only shows the amounts you have bought and sold, but no profits are stated. Now I am really in trouble with my tax return because I don’t know how to report these sales. The amounts are moderate, a few tens of euros in profit now and then. But I cannot, even with my best efforts, calculate capital gains when the buy and sell amounts are different, and I haven’t sold everything at once. How can I proceed with this? Can I ask the tax authorities for a fine or a tax increase when I simply cannot report the sales? Or is there some software that would calculate these automatically?