UK Investors Could be Paying Double Tax on MicroStrategy’s STRC Stock
UK investors buying MicroStrategy's STRC stock directly may face double taxation because distributions are treated as foreign dividends instead of non-taxable Return of Capital.Summary
MicroStrategy's Variable Rate Series A Perpetual Preferred Stock (STRC), which offers UK retail investors access to a Bitcoin-backed product yielding around 11.5% annually, presents a significant hidden tax problem for UK investors outside of an ISA.
In the US, the monthly payments are classified as a non-taxable Return of Capital (ROC), reducing the cost basis. However, UK brokers typically classify these distributions as foreign dividends, subjecting them to income tax at marginal dividend rates (up to 39.35%) plus Capital Gains Tax (CGT) upon sale.
Crypto analyst James Van Straten suggests a more tax-efficient alternative: the 21Shares Strategy Yield ETP (STRC) listed on Euronext Amsterdam and Paris. This Swiss-domiciled, accumulating ETP reinvests distributions into the Net Asset Value (NAV), meaning investors generally only face CGT upon disposal, avoiding the income tax layer. The tax disadvantage disappears entirely for investors utilizing a Stocks and Shares ISA, which shelters all gains and income up to the annual limit.
(Source：BeInCrypto)