Tax Question

[Phaceliacapital]

Does anyone know the following:

 

From a tax perspective, what happens when I, as an EU investor, buy the US ADR of a Mexican company that is going to do a spinoff whereby I receive one share of the spun off entity for each ADR I own?

 

Thanks in advance.

[TwoCitiesCapital]

I'm certainly no expert, but I thought that most spin-offs were done with 0 tax consequences. I could be wrong though - all of the spin-offs I've participated in so far have been in tax-free/tax defferred accounts so I don't have any direct experience.

 

edit: just realized that the ones I participated in weren't ADRs and were simply the foreign shares trading pink sheets in the U.S. Sorry that this doesn't apply :/

[Hielko]

You should check how the ADR intends to handle the spin-off. It is possible that they will simply sell the shares of the spin-off and distribute cash.