Hi traders!
I know this is a common topic in the community, but I feel we havenāt really got deep into it.
We talked about getting this feature within a release a few months ago. This was probably Pies what was referred to.
Although Pies are amazing, I truly love them, I canāt really think of DRIP when talking about pies. Itās half DRIP letās say imoā¦
Iād love to see a DRIP option in individual stocks as like Robinhood does. This would help us so much as dividend investors as I have to manually be adding those earning each time I get paid which is so annoyingā¦
Afaik in terms of use there is the feature mentioned.
21. Dividend Reinvestment
21.1. We allow for dividends on stocks in your account to be reinvested and it can be done automatically if you instruct us to do so. Dividends on stocks will only be reinvested in the same stock where the dividend originated from. Instructions to reinvest dividends will not be carried out if your account has been suspended or restricted by us in accordance with this agreement.
@joseaay any updates on this feature?
With the introduction of the FX conversion fee, I believe it could be a great opportunity to avoid the fee on each dividend payment.
I was able to open a chat with customer service to find out whatās happening with that article.
They told me that article is referring to autoinvest feature within PIES. I said that it doesnāt make any sense as they clearly say in the article:
āWe allow for dividends on stocks in your account to be reinvested and it can be done automatically if you instruct us to do so.ā
I donāt even have to instruct Trading212 to be able to autoinvest in PIES so they are clearly talking about manually added funds. But I kept receiving the same feedback: āThey donāt have that option available and the only way of doing that is through the PIESā.
I feel kinda fool tbh, feels quite dodgy all that whole 21 Articleā¦
If you wish that the dividends of a particular company you are holding are reinvested in itself fully, the option would be to create a Pie, put only this one stock in it and activate DRIP. Then the received dividend will be allocated to the Pie and reinvested in the stock once the Pieās threshold is reached.
Yeap, but I still have not understood what the Article 21.1 of the clients agreement is there for plus, the main reason I donāt use PIEs that often is because thereās no way I can setup my PIEs to be funded via my accountās balance. I have to use a payment method which will incur on a 0.7% fee after reaching Ā£2000.
I use Trading212 because was promised and sold to be a 100% free brokerage but every step of my journey with T212 is being faced with a new type of feeā¦
Hi, your suggested āwork aroundā would do the required but could imagine getting messy with many pies with just one stockholding. Was that an intended use of pies? It would be more logical to have an option (blanket) you can set so true DRIP takes place on all dividends stocks. Maybe/also include an option on each stock allowing selective deactivation of DRIP on an individual stock. Leave pies to act as a convenient collator. Thanks.
Does this mean, that if the threshold is not met we are paying taxes on the gains?
For example, I get 10 USD dividend payment from PIE which is set on auto-invest (30 USD threshold). 10 USD are taxed and drops in as cash waiting for the threshold to be met?
In case I receive 50 USD (30 USD threshold) the amount is not taxed and is automatically reinvested?
not quite. DRIPs have no special tax considerations. capital gains are what youāre thinking of and that will always apply. there is no tax waiver for dividends that are reinvested via a DRIP, it is simply a means of streamlining a process you can do yourself. in the case of DRIPs via a broker, you do receive cash before it is used to purchase more shares from the market, so you have to account for that against your dividend/income tax allowance.
How Taxes Affect DRIP Investing
Even though investors do not receive a cash dividend from DRIPs, they are nevertheless subject to taxes, due to the fact that there was an actual cash dividendāalbeit one that was reinvested. Consequently, itās considered to be income and is therefore taxable. And as with any stock, capital gains from shares held in a DRIP are not calculated and taxed until the stock is finally sold, usually several years down the road.
Nonresident aliens are subject to no U.S. capital gains tax, and no money will be withheld by the brokerage firm.
However, this does not mean that you can trade tax-free. You will likely need to pay capital gains tax in your country of origin.
30% is the full rate of Dividend tax for foreign investors, which is reduced to 15% at its lowest, but it depends on the country you are in and their double taxation treaty with the US. some will still have to pay the full 30%, others around 20~26% and then countries like the UK where itās the minimum 15%.
this initial 15% is taken from dividends before you receive them, however when cash enters your account you are subject to your own countries policy regarding dividend payments. this policy may or may not allow you to declare the US dividend taxes against your own, however the fact remains that taxes must be handled for all cash you receive that is not inside a tax-wrapper like the UKs āStocks and Shares ISAā.
capital gains are determined by your country of origin, not by the US government. basically you are not a US citizen so you donāt report your taxes to the US, you still have to report them to your own country and pay what ever is due beyond those covered by allowances. a DRIP is just a scheduled order to use dividends received to purchase more of the same stock, the dividend is still subject to your local tax policy and then once you eventually sell your shares you are subject to your governments Capital Gains policy.
I can earn in a normal account Ā£12.3k capital gains. this means the total profit of sales made in the tax year are not taxed to this amount, but as soon as it exceeds this I must pay taxes due on further earnings. so if I earn Ā£12.4k I must pay taxes on the excess Ā£100
Donāt ever assume, make sure to look it up and get confirmation because the tax offices are rarely forgiving. your link references āUS internet brokersā. T212 UK is a UK entity and thus a UK internet broker, T212 have recently launched an EU entity to onboard new (and eventually all existing) European clients, which will then naturally be a EU broker.
