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 by Wells Fargo Clearing Services, LLC (“WFCS”) in connection with newly implemented financial transaction taxes, WFA will charge a Foreign Financial Transaction Fee on transactions that trigger the imposition of financial transaction taxes. The amount of the Foreign Financial Transaction Fee will offset the financial transaction tax that is imposed as a result of the transaction.* Where applicable, the Foreign Financial Transaction Fee applied by WFA to a specific transaction will be included in the “Other” fee category on the transaction confirmation. WFA 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, WFA 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 WFA’s 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 WFA 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.
|Transactions Subject to the Foreign Financial Transaction Fee||Fee Amount||Date|
|Foreign Financial Transaction Fee Information Table|
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
|Foreign Financial Transaction Fee Information Table|
2. Transactions in Certain Italian Securities and Derivatives – Purchases and other acquisitions of 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.
Additionally, any transactions in derivative instruments (including but not limited to stock index and single stock futures, stock and stock index options, swap and forward contracts, and warrants and covered warrants) where: (i) any of the Italian securities in the preceding paragraph is the primary security underlying the derivative instrument (or contract); (ii) the value of derivative instrument is primarily dependent on any of the Italian securities in the preceding paragraph
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
For derivative instruments: a fixed amount/fee ranging from EUR€0.00375 to EUR€200.0 (as applicable) depending on the type of contract/instrument, its notional value and 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.
*The fee charged by Wells Fargo Advisors on these eligible transactions will either be charged: (i) to offset taxes/charges incurred by Wells Fargo Advisors as a result of the transaction; or (ii) so that Wells Fargo Advisors 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.