ADRs

From those of you who are not familiar with these, from wiki:

"An American depositary receipt (ADR) is a negotiable security that represents securities of a non-U.S. company that trades in the U.S. financial markets[SUP].[/SUP][SUP][/SUP] They are the domestic equivalent of global depository receipts. Securities of a foreign company that are represented by an ADR are called American depositary shares (ADSs).

Shares of many non-U.S. companies trade on U.S. stock exchanges through ADRs. ADRs are denominated and pay dividends in U.S. dollars and may be traded like regular shares of stock."

But what I'd like to know is:

Is there anything other than the certain fees involved (already checked those) that I need to take into account before I grab one of these?

 

Taxes are always fun.
However this particular ADR doesn't pay a dividend so I won't have to worry about dividend taxes, which might or might not get complicated with the witholding tax. How does it work in general with that though? Company is Chinese... so is it China or USA that grabs the witholding tax?

I move around quite a bit (and so does my fiscal residence) so for these long term investments I don't even want to start guessing where I will be when I press the sell button.

 

Liquidity can also be an issue. Some ADRs/GDRs aren't actually that easy to trade in and out of. So it's worth getting a sense of what the daily flow is for them. As for tax, I think the dividends get adjusted to reflect the tax treatment - not entirely sure.

 

Yeah if they suddenly start paying a dividend then I'll have to get in touch with the tax dude and get it sorted out. Currently USA is grabbing a 15% tax from all dividends but due to tax agreements I get that taken into account by the tax officials here. So no harm done. Not sure what the deal is with China, but as I said it doesn't really affect me since this particular company doesn't pay dividends in the first place.