What is an American depositary share (ads)?

Meanwhile, an American depositary share (ADS) is the actual U.S. dollar-denominated equity share of a foreign-based company available for purchase on an American stock exchange. An American depositary receipt (ADR) allows foreign companies to list their shares on U.S. stock exchanges.

What is an ADR in stock trading?

An ADR can represent a one-for-one exchange with the foreign shares, a fraction of a share, or multiple shares. This is one major way in which traditional U.S. stocks differ from ADRs. This is an important consideration, so let's go through an example.

Are ADRs taxed differently than common stock?

ADRs are also taxed differently than common stock. You’ll still need to pay the same capital gains taxes and dividend income taxes on ADRs that you would pay on shares of U.S.-based common stock. However, you must also pay dividend taxes levied by foreign governments on stocks issued in their country.