Fancy getting your hands on Apple (AAPL:NDQ), Facebook (FB:NDQ) or Samsung (005930:KRX) shares? There is a whole range of exciting stocks listed on exchanges around the world that are tempting to UK-based investors.

Buying overseas-listed stocks can take a little bit of extra work but certainly won’t give you too much of a headache. The main issues to consider are some forms and extra taxes and charges.

What are you allowed to buy?

In the first instance you should check whether your platform allows you to hold foreign shares within the product you hold – whether that’s a dealing account, ISA or SIPP (self-invested personal pension).

Under HMRC rules, you can hold shares listed on a ‘recognised stock exchange’ in an ISA but this doesn’t necessarily mean your ISA provider will allow it. Similarly, you’re allowed to hold foreign shares in a SIPP but each pension provider will have their own set of rules.

‘Pension providers have a list of what investments they allow to be held in their products and it could be completely different to the legislation,’ says Neil MacGillivary, head of technical support at financial services group James Hay.

If your platform does permit overseas stocks, you might need to completely a country-specific form before you can buy shares. For example, you’ll need to fill out a W-8BEN form before you can trade US-listed shares.

How much extra will it cost?

Most investment platforms don’t have additional charges for holding overseas shares but there could be ancillary costs.

Russ Mould, investment director at AJ Bell Youinvest, says shares on a certain exchange might not be tradeable online, in which case you might incur a higher telephone trading cost.

You could also get stung by foreign exchange charges. A platform might charge 1% to convert any dividends paid in foreign currency back into sterling.

When your shares are converted into sterling you’ll be exposed to foreign exchange risk. You could also face additional charges levied by the local government or stock exchange. These include stamp duty, stock exchange fees and local tax, all of which vary according to the country in which the shares are listed.

It’s important to check whether the foreign government in question imposes a withholding tax on dividends. MacGillivary says it is sometimes possible for this tax to be offset if the country has a double taxation agreement with the UK, but the rules and regulations vary widely.

For US shares, filling in a W-8BEN form will ensure you only pay a 15% withholding tax on dividends as opposed to 30%. The form will be valid for three calendar years after the year in which you sign it.

Apply the same research process as UK stocks

As with UK shares, you’ll need to research the merits of any overseas stock and ensure it fits with your investment strategy. It’s harder to do this for foreign stocks, but the internet makes things a little easier.

‘The regulatory news services will provide around 40% of all US corporate news announcements, while the American regulator, the Securities and Exchange Commission, runs the EDGAR database which investors can use to monitor news flow from American companies,’ says Mould.

‘In addition, individual US firms’ websites are packed with information for investors – and remember US corporations report quarterly so there’s almost too much information, not too little.’

He says the big Japanese and Asian companies have terrific websites in English, not least because many of them have overseas listings which mean investors can buy into them via depositary receipts which are traded on local stock exchanges in London and New York.

‘All you usually have to do is type the company’s name, followed by the words “investor relations” into your preferred search engine and away you go – it works for Brazilian oil giant Petrobras, for example.

Other ways to get exposure to foreign stocks

An alternative would be to buy an investment trust, unit trust or exchange-traded fund (ETF) which focuses on particular countries and regions of the world.

If you’re keen on US stocks, for example, you could consider iShares NASDAQ 100 UCITS ETF (SXRV), which tracks an index whose constituents include Apple, Microsoft (MSFT:NDQ), Amazon (AMZN:NDQ), Facebook and Alphabet (GOOGL:NDQ).

If you invest in broad funds or ETFs you’ll likely get exposure to a big collection of stocks so the amount you have theoretically invested in any one company will be small. (EP)

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