Foreign Financial Transaction Fee Overview
In 2012, a number of foreign governments proposed and/or took steps to impose a financial transaction tax on any financial services firm that facilitates a trade in certain securities (or categories of securities) connected with the country assessing the tax. These financial transaction taxes are levied extraterritorially and are imposed on investors and / or financial services firms (regardless of where the investors or firms are located or where they conduct business), and the financial services firms that facilitate transactions (e.g. by accepting or executing trade orders) in securities that are subject to the financial transaction tax are responsible for remitting the tax to foreign tax authorities. While the various countries adopting financial transaction taxes will uniquely define which securities transactions will trigger the tax and the amount of the tax, it is expected that the financial transaction taxes will apply to trades in an increasing number of securities of foreign issuers as well as U.S.-issued American Depository Receipts for foreign securities.
In order to directly offset increased expenses incurred in connection with newly implemented financial transaction taxes, Wells Fargo Clearing Services, LLC ("WFCS") will charge a Foreign Financial Transaction Fee on transactions executed through WFCS that trigger the imposition of financial transaction taxes. Where applicable, the Foreign Financial Transaction Fee applied by WFCS to a specific transaction will be included in the “Other” fee category on the transaction confirmation. The amount of the Foreign Financial Transaction Fee will offset the financial transaction tax obligation that results from the transaction.* WFCS may in its discretion, and without notice, elect to waive the Foreign Financial Transaction Fee for certain transactions that trigger the imposition of financial transaction taxes. In such instances, WFCS will still remit the required financial transaction tax amount(s) to the appropriate foreign tax authority, but no Foreign Financial Transaction Fee will be charged to you or reflected on the transaction confirmation.
The securities transactions that will be subject to the Foreign Financial Transaction Fee, the amount of the Foreign Financial Transaction Fee to be applied, and the date after which the Foreign Financial Transaction Fee may be applied to eligible transactions is identified in the “Foreign Financial Transaction Fee Information Table” below. This table will be updated as foreign countries implement new financial transaction taxes or modify existing financial transaction taxes. Because WFCS expects the universe of transactions subject to the Foreign Financial Transaction Fee to grow and change over time, it is important for clients who are considering investing in foreign securities and American Depository Receipts ("ADRs") for foreign securities to review the Foreign Financial Transaction Table before placing orders.
Foreign Financial Transaction Fee Information Table
|Transactions Subject to the Foreign Financial Transaction Fee
|1. Transactions in Certain French Securities – Purchases and other acquisitions of equity securities, ADRs and other securities that provide (or have the potential to provide) the security owner with capital or voting rights (e.g. convertible/redeemable bonds, warrants, etc.) in companies that have their registered office in France and that have a market capitalization in excess of $1 Billion Euros calculated as of the last trade date prior to Dec. 1 each year (as published annually by the French Ministry of Economy and Finance on Jan. 1).
|0.3% of the aggregate value of the securities acquired in a transaction subject to the French Transaction Tax.
|Eligible transactions that settle on and after January 1, 2017.
2. Transactions in Certain Italian Securities and Derivatives – Purchases and other acquisitions equity securities, American Depository Receipts, and other securities that provide (or that have the potential to provide) the owner of such securities with capital or voting rights (e.g. convertible/redeemable bonds) in companies that have their registered office in Italy and that have a market capitalization in excess of 500 Million Euros calculated annually in December by the Italian Commissione Nazionale per le Società e la Borsa.
For equities and other non-derivative securities: either .10% or .20% of the aggregate value of the securities acquired in a subject transaction based on where the transaction is executed.
|Eligible Transactions that settle on and after March 1, 2013. The percentages stated in the “Fee Amount” column are the Fee rates effective as of January 1, 2014 for eligible transactions settling on or after January 1, 2014.
|3. Transactions in Certain Spanish Securities – Purchases and other acquisitions of equity securities and ADRs, including such acquisitions resulting from the execution or settlement of convertible/redeemable bonds or from derivative or other financial instruments/agreements, in Spanish companies that have a market capitalization in excess of 1 billion euros on Dec. 1 each year (as published annually by the Spanish tax authorities in December).
|0.2% of the aggregate value of the securities acquired in a transaction subject to the Spanish financial transaction tax
|Eligible transactions that settle on and after January 16, 2020
*The fee charged by WFCS on these eligible transactions will either be charged: (i) to offset taxes/charges incurred by WFCS as a result of the transaction; or (ii) so that WFCS may pay the applicable foreign transaction tax on your behalf where the tax is your obligation for engaging in a subject transaction. Currently, the foreign transaction tax obligation is a direct obligation of the purchaser or a party to a derivative transaction where the subject transaction involves Italian securities as outlined in row 2 of the Foreign Financial Transaction Fee Information Table.
Wells Fargo Clearing Services, LLC is a registered broker-dealer (member SIPC), a non-bank affiliate of Wells Fargo & Company.