eToro Dividends Explained: Receiving and Paying Taxes

While many traders prefer to use online trading platforms like eToro to make lots of short-term deals in hopes of earning by buying cheap and selling expensive, that’s not the only way to get profits. There’s an easier way for those who are ready to wait a little bit: you can just earn dividends. In this article, we explain how that works with eToro: which instruments are supported, how to receive your share, and if you need to pay any taxes.

Supported instruments

The broker is well-known for its extensive range of available trading instruments: there are currencies, stocks, and various cryptocurrencies. Moreover, these assets are traded as derivatives, so it may be a real problem to understand which of them can bring you dividends. Let’s start with stocks: you can get paid if you own shares and hold them on your account. When the company decides to distribute some dividends, you receive some amount of money for every share you have.

Earning with derivatives is just as easy. If you have an active CFD, you will get money for every share, even despite not actually owning them. The broker just adds the same sum to your account, and that affects the prices of CFDs. Dividends for CFDs are paid on the ex-dividend date, and you must hold a position two days prior to that date. You can always check such dates in your account, so there is no need to monitor that manually.

ETFs work in a similar way. Let’s say the broker owns some shares, and you’ve invested in that fund to diversify your portfolio. When the broker receives dividends for the investment, it will distribute the money to its clients, so you also get your fair portion. Basically, when you hold a long position, those dividends get added to your account, and if you hold a short position, they get deducted. Now let us look at how to receive those eToro dividends.

Receiving dividends

Although eToro claims to add that amount of cash to your account immediately after the release, there may be some minor delays due to technical reasons. There are no established dates for companies to release their dividends, but the majority of businesses pay two or four times a year. If you are unsure when to expect your money, make sure to check out the broker’s dividend calendar where every date is listed. You also need to pay a tax for dividends, but eToro deducts it automatically depending on the location of every company.