New buy: Getting overweight on Novo Nordisk (NVO)

There are a lot of companies I’d like to own shares of but sadly most of them aren’t attractively valued at the moment. This is why I once again gravitated towards buying more shares of Novo Nordisk (NYSE:NVO).

Earlier this week I added 44 shares of Novo Nordisk to my dividend portfolio, which will give me an additional 22.97EUR in after-taxes annual dividend income.

Closing in on 1500EUR in yearly dividend income
According to my latest dividend income projection, I can look forward to an after-taxes dividend income of 1491.46EUR over the next 365 days. Unilever recently promised they would increase their dividend by 12 percent (the exact figure will be announced on April 20) so there’s a good chance my projection will exceed 1500EUR before the end of this month.

It’s still nowhere near financial independence but it feels great to have an extra 125EUR or so available every month to buy more shares.

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Claiming back dividend tax from the Danish…
One of the things I don’t like about Novo Nordisk is that the Danish government has a 27 percent dividend withholding tax. Despite all that’s being said about the so-called four freedoms of the European Union, this is all one big joke for small investors and especially for those living in Belgium as we can’t even deduct foreign withholding from our national dividend taxes.

There’s supposedly free movement of capital and there are tax treaties to limit double taxation but ironically it’s a lot easier to get the reduced withholding rate (15 percent) from the United States than from most fellow EU countries. To reduce the dividend withholding tax for US stocks you fill out a single form and you’re set forever. For most European countries, you have to deal with a lot of bureaucracy.

As Novo Nordisk is becoming an increasingly larger position in my dividend portfolio, I’ve started to look into how I can reclaim the excess dividend withholding tax. Belgium has a tax treaty with Denmark to reduce the dividend withholding from the standard rate of 27 percent to a reduced rate of 15 percent.  But like I said, this isn’t done automatically and it involves quite a lot of paperwork so most investors probably don’t bother to do this.

The biggest stumbling block perhaps is that you need a tax residency certificate signed and stamped by your local tax administration. It’s almost half an hour drive for me and they’re only open 9-12 A.M. on work days. I’m not entirely sure but I think you need a new form for every dividend tax reclaim application. I haven’t tried it yet, the Danish tax authorities give you  three years time to reclaim excess dividend withholding tax so at the moment I’m just making sure I have all the required paperwork tucked away in a folder on my computer.  I’m probably going to wait until after I’ve received Novo Nordisk’s interim dividend in summer 2018 to minimize the work involved.

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9 thoughts on “New buy: Getting overweight on Novo Nordisk (NVO)

  1. dividendsandhobbies

    I don’t have many foreign companies but one out of Britain doesn’t charge taxes so I’m happy for that. Others have a 15 percent I think so but I can claim it on my taxes but I let the computer do all that. As long as I make money I’m happy.

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  2. ambertreeleaves

    Agreed, the EU fails big time when it comes to investing for the retail…!

    Nicole is on my radar as well, via my options portfolio.

    125 a month extra income is very nice. My mental goal is to pay each year for our ski holiday via my options writing. Last year, i almost made it.

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    1. Dividends Are Coming Post author

      Indeed, they all talk a big game about the glorious four freedoms but when it comes down to taxes a lot of member states erect huge bureaucratic walls to ensure they need to refund as little as possible.

      What is Nicole or is this an autocorrect typo?

      Nice job on getting your ski trip covered via option income.

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    1. Dividends Are Coming Post author

      Will do haha 😉

      On the surface the process looks relatively simple, the details are described on the first link below and the reclaim process can be done via the second link.

      http://www.skat.dk/SKAT.aspx?oId=2236538&vId=0&lang=US
      https://udbytterefusion.skat.dk/UKSelfservice/submission/submit/SKATRefusion_en

      I will probably give it a try in August or September 2018, at the moment the total recoverable amount is still a bit too small versus the required time investment.

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  3. When Do You Retire?

    Solid buy! I own some Novo shares as well. I think they have been punished too hard for their reduced growth prospects. They still have a strong business going on with very good fundamentals.

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