> DRIPs are generally a bad idea.

DRIP investing is often a bad idea.... it's half the reason why Accum ETFs exist at all.

The other half being that 'growing funds under management' is always appealing for platforms with a TER fee.

(I'm not 100% clear on why you're talking about DRIP when the ETF in question doesn't seem to offer a DRIP scheme, and Accums are legally different from DRIP?)

but it depends...

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> DRIPS... Value destruction every time.

*Every* time? That is surely not correct. It depends on where you live, what you invest in.

In situations where there is no dividend withholding tax on outgoing dividends (e.g. UK + others) and no individual tax on incoming dividends (Irish/Lux Accum ETFs, UK ISA/SIPP account), DRIP or manual reinvestment is harmless.

Certainly not 'destruction'.

And it sometimes opens up interesting opportunities where some business farms a lucrative niche but has no paths to expand, or is required by law to pass on dividends for some reason (e.g. REITs).

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> There are two levels of tax.

(in relation to dividends)

About 'two levels', it's possible to be hit by dividend taxes from many countries from a single dividend, not just two.

I am not a tax expert, and what follows is not tax advice, purely my opinion ... (with ZERO AI, I should add, just my own random knowledge in the topic)

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Consider an ordinary Belgian with an ordinary Belgian brokerage account, dual Belgian-US citizenship, and who moves to the UK and will become tax resident.

That's not a common situation but also not a shockingly strange one.

I'm using it here as an illustrative example of how quickly the complexity builds around dividend taxation.

This person has not yet qualified for tax residency in the UK, so they have no certificate with which to beg their Belgian broker not to apply Belgian 'divi arrives in your broker' WHT tax.

They (or ETFs they hold) have investments in big international companies, including let's say TSMC, Toyota.

Generally, retail brokers only allow you to hold the ADR listing of a Taiwanese company, not the Taiwanese listing directly. Ditto for Japan. Let's do Toyota:

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1) Toyota pays a dividend to the ADR company. Japan applies outgoing dividend tax -15%.

2) The ADR receives the dividend. It pays the Belgian brokerage. A -15% US WHT applies.

3) The Belgian brokerage receives the dividend and applies a -30% Belgian withholding tax automatically (the 15% x 2 above are not able to be offset against this tax).

4) The Belgian person then has a tax liability in the UK of up to 54%. With some effort & documentation, they may be able to offset half the Belgian 30% tax. The remaining 15% taken by Belgium is non-recoverable.

5) The US taxes their citizens on global income. No idea how much extra this would be. Depends on their income.

So the total tax on the dividend would be 15% applied 3 times, plus 54%, plus whatever US tax.

1000 yen of Toyota dividend becomes e.g. less than 250 yen of actual cash for the shareholder.

And it's a lot of work to track all these things are being paid correctly, evidenced, reclaimed etc.

So, maybe 5 levels... maybe more, I mean I'm not using AI here, so I can't construct convoluted situations, this is just what I already know offhand as a regular bloke thinking about my friends actual lives.

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If your share is in place A, the ADR/ETF in place B, the brokerage in place C, and your tax residency in D, and you have citizenship of country E (or 'ongoing multi-year tax residency after you leave' country F), dividends can get expensive fast.

DRIP makes it even worse again. For this Belgian doing DRIP? *Eight* levels of friction before the money goes back to being company shares.

The 5 levels above, plus the act of buying the share with the remains of the dividend would invoke stamp duty (0.5%) and PTM levy (£1 flat fee on large trade). And spread, as a bonus form of friction.

TRS


PS To anyone - please highlight and correct any errors in the above that you may notice. I am certainly not a specialist in this topic.