eToro issues update on publicly traded partnerships
Online broker eToro has issued an update in publicly traded partnerships (PTPs). eToro will no longer be supporting trading the underlying assets of Publicly Traded Partnerships (PTPs) for non-US users.
The broker is making this change in response to the IRS’ new Internal Revenue Code Section 1446(f) which comes into effect on January 1, 2023. It impacts the proceeds from sales of PTPs held by non-U.S. tax residents.
All sales become subject to a 10% withholding tax. This withholding tax means that if you close a position worth $10,000, even if no profit is generated, there will be a $1,000 withholding tax. As a result, you would receive $9,000.
Due to the tax obligations of holding and maintaining these assets, eToro will no longer offer ‘real’ positions in PTPs. The company is requesting that you close any open ‘real’ positions in PTPs before market close on December 26, 2022.
If the above is not done, eToro will liquidate any (relevant) remaining holdings on December 28, 2022.
Existing positions have been moved to *Close Only*. *Close Only* means that you cannot open new ‘BUY’ positions on the underlying asset, but can close existing positions. Users wishing to gain exposure to PTPs will still have the option to open CFD positions should they choose to.
A list of PTPs can be found here.