Why Are Dividends From Non-US Companies Lower Than Announced on Pluang?

Non-US companies listed on US exchanges trade as American Depositary Receipts, or ADRs, and their dividends pass through an extra layer before reaching you. Because the underlying company is incorporated outside the United States, its home country can apply its own withholding tax on the dividend on top of the standard US rate of 15% for non-leveraged positions or 30% for 2x leveraged ones. Two tax authorities can therefore both take a share, rather than only one. Currency conversion adds a second reduction. A non-US company usually declares its dividend in its own currency, while US stock dividends are always distributed in USD, so the announced figure has to be converted before it reaches you. Exchange rate movement between the announcement and the distribution can shrink the amount further, and the two effects compound.

• What an ADR is: A certificate representing shares in a non-US company, traded on a US exchange in USD.
• Extra withholding: The company's home country can tax the dividend on top of the US 15% or 30%.
• Two authorities: Both jurisdictions can deduct, so total tax can exceed the standard US rate alone.
• Rate varies: The additional rate depends on the home country, so it differs from stock to stock.
• Currency conversion: Dividends declared in a local currency are converted to USD before distribution.
• Example: A Canada-based company such as CNQ declares in Canadian dollars but is distributed in USD.
• Compounding effect: Extra withholding plus conversion is why the amount can look well below the headline figure.

Related questions:

Q: What is an ADR, and why do non-US companies use one?
An American Depositary Receipt is a certificate representing shares in a foreign company, traded on a US exchange and priced in USD like any other US-listed stock. It lets investors hold a stake in a company based in Canada, the UK, or elsewhere without opening a brokerage account in that country or converting currency for every trade. On Pluang an ADR buys and sells like a normal US stock; the difference appears at dividend time.

Q: Why can total withholding on an ADR dividend exceed the usual US rate?
Because the issuing company is incorporated outside the United States, its own tax authority can withhold from the dividend before the US withholding stage applies at all. Two jurisdictions can each take a share, rather than the single US deduction you would see on a domestic stock. The size of that additional withholding depends entirely on the company's home country and its own tax arrangements, so it varies from one ADR to another rather than following a single fixed number.

Q: How does currency conversion reduce the dividend I receive?
Many non-US companies declare their dividend in their own currency — a Canadian company will typically announce in Canadian dollars, for example — but US stock dividends are always distributed in USD. The declared figure therefore has to be converted before it reaches your balance, and the exchange rate can move between the announcement date and the actual distribution. That conversion is applied alongside any home-country withholding, so the two reductions stack.

Q: Does this also happen with dividends from US-based companies?
No. A company incorporated in the United States declares its dividend in USD and is subject only to US withholding, so there is no second tax authority and no currency conversion step. That is why the gap between the announced and received amount is usually much narrower on a US company than on an ADR. If you want to know which category a stock falls into, its country of incorporation is shown on its asset page.