For an equivalent company security, does it make more sense to trade them in country with dividend tax free?
You might have to pay a premium for the stocks on the dividend tax–free exchanges. For example, HSBC on the NYSE yields 4.71% versus HSBC on the LSE which yields only 4.56%. Assuming the shares are truly identical, the only reason for this (aside from market fluctuations) is if the taxes are more favorable in the UK versus the US, thus increasing demand for HSBC on the LSE, raising the price, and reducing the yield. A difference of 0.15% in yield is pretty insignificant relative to a 30% versus 0% dividend tax. But a key question is, does your country have a foreign tax credit like the US does? If so you (usually) end up getting that 30% back, just delayed until you get your tax return, and the question of which exchange to buy on becomes not so clear cut. If your country doesn't have such a tax credit, then yes, you'll want to buy on an exchange where you won't get hit with the dividend tax. Note that I got this information from a great article I read several months back (site requires free registration to see it all unfortunately). They discuss the case of UN versus UL--both on the NYSE but ADRs for Unilever in the Netherlands and the UK, respectively. The logic is very similar to your situation.
Check out the questions about why stock prices are what they are. In a nutshell, a stock's value is based on the future prospects of the company. Generally speaking, if a growth company is paying a dividend, that payment is going to negatively affect the growth of the business. The smart move is to re-invest that capital and make more money. As a shareholder, you are compensated by a rising stock price. When a stock isn't growing quickly, a dividend is a better way for a stockholder to realize value. If a gas and electric company makes a billion dollars, investing that money back into the company is not going to yield a large return. And since those types of companies don't really grow too much, the stocks typically trade in a range and don't see the type of appreciation that a growth stock will. So it makes sense to pay out the dividend to the shareholders. "This is an excellent question, one that I've pondered before as well. Here's how I've reconciled it in my mind. Why should we agree that a stock is worth anything? After all, if I purchase a share of said company, I own some small percentage of all of its assets, like land, capital equipment, accounts receivable, cash and securities holdings, etc., as others have pointed out. Notionally, that seems like it should be ""worth"" something.  However, that doesn't give me the right to lay claim to them at will, as I'm just a (very small) minority shareholder. The old adage says that ""something is only worth what someone is willing to pay you for it."" That share of stock doesn't actually give me any liquid control over the company's assets, so why should someone else be willing to pay me something for it? As you noted, one reason why a stock might be attractive to someone else is as a (potentially tax-advantaged) revenue stream via dividends. Especially in this low-interest-rate environment, this might well exceed that which I might obtain in the bond market. The payment of income to the investor is one way that a  stock might have some ""inherent value"" that is attractive to investors. As you asked, though, what if the stock doesn't pay dividends? As a small shareholder, what's in it for me? Without any dividend payments, there's no regular method of receiving my invested capital back, so why should I, or anyone else, be willing to purchase the stock to begin with? I can think of a couple reasons: Expectation of a future dividend. You may believe that at some point in the future, the company will begin to pay a dividend to investors. Dividends are paid as a percentage of a company's total profits, so it may make sense to purchase the stock now, while there is no dividend, banking on growth during the no-dividend period that will result in even higher capital returns later. This kind of skirts your question: a non-dividend-paying stock might be worth something because it might turn into a dividend-paying stock in the future. Expectation of a future acquisition. This addresses the original premise of my argument above. If I can't, as a small shareholder, directly access the assets of the company, why should I attribute any value to that small piece of ownership? Because some other entity might be willing to pay me for it in the future. In the event of an acquisition, I will receive either cash or another company's shares in compensation, which often results in a capital gain for me as a shareholder.  If I obtain a capital gain via cash as part of the deal, then this proves my point: the original, non-dividend-paying stock was worth something because some other entity decided to acquire the company, paying me more cash than I paid for my shares. They are willing to pay this price for the company because they can then reap its profits in the future. If I obtain a capital gain via stock in as part of the deal, then the process restarts in some sense. Maybe the new stock pays dividends. Otherwise, perhaps the new company will do something to make its stock worth more in the future, based on the same future expectations. The fact that ownership in a stock can hold such positive future expectations makes them ""worth something"" at any given time; if you purchase a stock and then want to sell it later, someone else is willing to purchase it from you so they can obtain the right to experience a positive capital return in the future. While stock valuation schemes will vary, both dividends and acquisition prices are related to a company's profits: This provides a connection between a company's profitability, expectations of future growth, and its stock price today, whether it currently pays dividends or not." "They are similar in the sense that they are transferring money from the company to shareholders, but that's about it. There is different tax treatment, yes, but that's because they are fundamentally different. Dividends transfer money equally to all shareholders, but that also reduces the value of each share by the same amount, since it's cash out the door, which drops the value of the company. Shareholders are taxed on dividends at the capital gains tax rate. A buyback returns the cash to shareholders who decide to sell.  Other shareholders get a secondary benefit of now owning a slightly larger portion of the company since there are fewer shares outstanding.  Shareholders only pay tax if they sell shares for a gain. It that means when company buyback their stock, the stock price will definitely go up? Not necessarily. It depends on the price that the company buys back the shares for and what the ""opportunity cost"" of that cash is - meaning what else could the company have done with the cash that would have been better? Buybacks often happen in mature companies with undervalued stock prices and fewer opportunities for further investment.  If a company has an intrinsic value of $10 a share but its stock is trading at $8 a share, then it can instantly get a 25% ""return"" by buying back stock.  I use the term ""return"" loosely since the company does not actually profit from the buyback, but from the shareholder's perspective the company is worth more per share." The ultimate reason to own stock is to receive cash or cash equivalents from the underlying security. You can argue that you make money when stock is valued higher by the market, but the valuation should (though clearly not necessarily is) be based on the expected payout of the underlying security. There are only three ways money can be returned to the shareholder: As you can see, if you don't ask for dividends, you are basically asking for one of the top two too occur - which happens in the future at the end of the company's life as an independent entity. If you think about the time value of money, money in the hand now as dividends can be worth more than the ultimate appreciation of liquidation or acquisition value. Add in uncertainty as a factor for ultimate value, and my feeling is that dividends are underpaid in today's markets. "Depends. The short answer is yes; HSBC, for instance, based in New York, is listed on both the LSE and NYSE. Toyota's listed on the TSE and NYSE. There are many ways to do this; both of the above examples are the result of a corporation owning a subsidiary in a foreign country by the same name (a holding company), which sells its own stock on the local market. The home corporation owns the majority holdings of the subsidiary, and issues its own stock on its ""home country's"" exchange. It is also possible for the same company to list shares of the same ""pool"" of stock on two different exchanges (the foreign exchange usually lists the stock in the corporation's home currency and the share prices are near-identical), or for a company to sell different portions of itself on different exchanges. However, these are much rarer; for tax liability and other cost purposes it's usually easier to keep American monies in America and Japanese monies in Japan by setting up two ""copies"" of yourself with one owning the other, and move money around between companies as necessary. Shares of one issue of one company's stock, on one exchange, are the same price regardless of where in the world you place a buy order from. However, that doesn't necessarily mean you'll pay the same actual value of currency for the stock. First off, you buy the stock in the listed currency, which means buying dollars (or Yen or Euros or GBP) with both a fluctuating exchange rate between currencies and a broker's fee (one of those cost savings that make it a good idea to charter subsidiaries; could you imagine millions a day in car sales moving from American dealers to Toyota of Japan, converted from USD to Yen, with a FOREX commission to be paid?). Second, you'll pay the stock broker a commission, and he may charge different rates for different exchanges that are cheaper or more costly for him to do business in (he might need a trader on the floor at each exchange or contract with a foreign broker for a cut of the commission)." If the brokerage account holds US assets, such as the stock of US companies, then it may be taxable under some conditions. The rules are complex and depend on the nationality of the individuals, because the results may be affected by tax treaties between the United States and whatever country the person is from. Here is how it should look: 100 shares of restricted stock (RSU) vest. 25 shares sold to pay for taxes. W2 (and probably paycheck) shows your income going up by 100 shares worth and your taxes withheld going up by 25 shares worth. Now you own 75 shares with after-tax money. If you stop here, there would be no stock sale and no tax issues.  You'd have just earned W2 income and withheld taxes through your W2 job. Now, when you sell those 75 shares whether it is the same day or years later, the basis for those 75 shares is adjusted by the amount that went in to your W2.   So if they were bought for $20, your adjusted basis would be 75*$20. It is a very complex question to answer and it really depends. However, here are some points to consider and verify with your accountant or tax expert.  First, if you exercise now, the downside is that you may be subject to Alternative Minimum Tax (AMT) based on the theoretical gain on the stock (current price minus your strike price) when you file your tax return.  The other obvious downside is that if the company goes nowhere, you are stuck with the stock and potentially lose money.  The benefit is that the clock starts ticking for long-term capital gains so if you sell after 1 year from the exercise date (or your company gets sold) then the gain would be taxed as long-term capital gain which is taxed at a lower rate. If your company were to get sold, the gains are not necessarily taxed as ordinary income.  If it is a cash transaction then most likely (unless you have exercised and held the stock for over a year).  However, if it is a stock sale, then you may end up getting stock of the company that acquires your company.  In that situation, the tax event would be when you sell the new shares vs. the time of company sale. Finally, whether to exercise or not also depends on how you feel about the prospects of the company.  If you think they will be sold or of more value down the road then exercising makes sense.  If you are not sure then you could hedge your bets by only exercising a portion of it. You should definitely consult with a financial advisor or a tax consultant regarding these matters.