Foreign Financial Transaction Fee Overview
A number of non-US governments 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 the pertinent 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 non-US issuers as well as U.S.-issued American depository receipts (“ADRs”) representing shares of non-US issuers.
In order to directly offset increased expenses incurred by Wells Fargo Clearing Services, LLC (hereinafter, “Wells Fargo Advisors” or "WFA") in connection with implemented financial transaction taxes, WFA charges a Foreign Financial Transaction Fee on transactions that trigger the imposition of financial transaction taxes. The amount of the Foreign Financial Transaction Fee offsets the financial transaction tax 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 tax authority, but no Foreign Financial Transaction Fee will be charged to you or reflected on the transaction confirmation.
The securities transactions subject to WFA’s Foreign Financial Transaction Fee, the amount of the Foreign Financial Transaction Fee applied, and the date after which the Foreign Financial Transaction Fee is applied to eligible transactions is identified in the “Foreign Financial Transaction Fee Information Table” below. This table will be updated as non-US countries implement new financial transaction taxes or modify existing financial transaction taxes. WFA expects the universe of transactions subject to the Foreign Financial Transaction Fee to grow and change over time. As a result, it is important for clients who are considering investing in non-US securities and ADRs representing non-US securities to review the Foreign Financial Transaction Fee Table below 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). |
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 August 1, 2012. The percentage stated in the “Fee Amount” column is the Fee rate effective for eligible transactions settling on or 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, ADRs, 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 an average market capitalization in excess of 500 Million Euros in November of the preceding tax year (as published annually by the Italian Ministry of Economy and Finance). 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 the 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. |
| Foreign Financial Transaction Fee Information Table |
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, 2021. |
*The fee charged by Wells Fargo Advisors on 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.