Is holding a diverse portfolio of shares is too much hassle?

J

jpd

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Key Post - The taxation of dividends from German companies

So I clicked on this link https://www.elster.de/bportal/aktivierung/JB0 I entered the Activation ID from the Email I received I entered the Activation Code from the letter Now I must choose a password Now I have to complete a personal profile - Name, address, Irish tax number, etc?
www.askaboutmoney.com


What a saga !

And the EU are wondering why EU citizens don't invest in EU companies on the same scale that Americans invest in American companies

I have € 28 reclaimable from the Germans but it isn't honestly worth the effort involved - unfortunately
 
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Brendan

This is definitely one of the reasons why I would not hold individual German stocks. It’s just not worth the hassle when they are equally better companies to hold shares in.
 
Bluefin said:
Brendan

This is definitely one of the reasons why I would not hold individual German stocks. It’s just not worth the hassle when they are equally better companies to hold shares in.
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Maybe there are German stocks worth holding that don't pay dividends thus skirting this palaver?
 
Bluefin said:
This is definitely one of the reasons why I would not hold individual German stocks. It’s just not worth the hassle when they are equally better companies to hold shares in.
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Good point.
I held mainly Irish stocks but everyone here said it was too risky and one should diversify. But the diversification does magnify the admin.

I presume that shares in other EU countries have similar issues?

I have UK shares and there are no withholding taxes. There is some tax but you can't get it back - which makes the admin much simpler.

Brendan
 
My point is investing in a diverse portfolio of individual shares from different countries with their own tax regimes has its own administrative burden and cost (monetary and time). The saga in this post has been ongoing for almost 8 years, as long as the time between deemed disposals.

At some point the benefits of the ETF outweigh the drawbacks. Pick your poison.
 
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So if you hold German shares and don't claim back the German tax, how much of your yield are you losing?

I hold shares in Siemens - which I assume is typical of German companies.

The dividend yield is about 2.5%

this is taxed at about 25%
You claim 15 percentage points back on your Irish tax return.
You try go claim back 10 percentage points from the Germans.

So if you fail to make a successful claim, you are losing out 10% of 2.5%, or 0.25%.

I would like to get the tax refund back from the German Revenue, but if I fail, it's not the end of the world.

So I don't think it should be a factor in the investment decision.


Brendan
 
Unless you've got both a relatively large portfolio, the knowledge and motivation to do everything yourself and a fair amount of time on your hands, the benefits of an ETF outweigh the costs in my opinion.

Unless you consider Berkshire Hathaway shares a good proxy for a diverse stock portfolio and your definition of a diverse portfolio is the S&P 500 (there's strong arguments for & against both perspectives) in which case you're probably better off holding Berkshire shares. I say "probably" because there may be tax implications.

Every decision has costs & benefits attached. Many of them are not financial, and many are also unknown at the time of making the decision. And each person will value the non-financial ones differently.

So ETF Vs stock is a personal best guess where your "correct" may be very different to your neighbours.
 
There was a thread in October on shares vs. ETFs where the topic of admin overhead came up. @3CC put together some figures and even before you crank up the variable of your time spent on admin, ETFs don't look nearly as unappealing as the headline tax rates make it seem - https://www.askaboutmoney.com/threa...eved-pension-contribution.237580/post-1904245

I am a firm believer that the right advice for the average person is to buy a single accumulating ETF and forget about it for 8 years. This view has only been strengthened by the noises coming from Government that taxation on ETFs is likely set to improve well within the next 8 years.
 
Time will tell on that. This will all depend on the multi national gravy train keeping on delivering.

I ended up getting an accountant to do my tax returns in the end - first to remain compliant with revenue and secondly it was getting to difficult to manage myself plus being time poor didn’t help.

NB: I still hold two Germany stocks - one threading water but paying a good dividend, the other is a disaster this year,
 
What tax implications other than CGT?
(BH doesn't pay dividends).
 
This reminds me a bit of threads where people ask "Where can I get my oil changed?" and they get all sorts of smart responses about how to change your oil yourself and anyone that doesn't is a fool who loves wasting money. There are DIY car enthusiasts and DIY investment/tax enthusiasts too.

I have massive respect for anyone who enjoys the challenge of reclaiming tax withheld on dividend payments from German plcs. I also know that there are about 0.1% of people who have any interest in this challenge and many of this tiny percentage will fail at it!
 
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Maybe in the original thread, but this thread was diverted from a comment that investing in German companies was too onerous to be worthwhile. Offering alternative opinions is appropriate.
 
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