A new clause in the Vanguard brokerage account agreement discloses that an outside company charges a percentage of foreign tax reclaims for clients who hold overseas stocks. The clause took effect on October 1, 2026, and it names neither the company nor the percentage. Vanguard describes the fee as the vendor’s, not its own.
Section 6.t of the Vanguard brokerage agreement
The text sits in Vanguard Brokerage Services’ Notice of Amendment to the Vanguard Brokerage Account Agreement, effective October 1, 2026. Section 6.t is headed as a foreign dividend tax withholding provision and reads, in full on the points that matter: “We have contracted with a third-party vendor to provide foreign tax relief and reclamation services which may allow You to receive a favorable foreign tax withholding rate at the time dividend or interest is paid to You in connection with Securities of issuers based in certain foreign jurisdictions.”
The next sentence is the one that carries the money. “The vendor charges certain fees for this service, including a percentage of the amount of the tax reclaim.” Two things follow from the wording. The charge is calculated on the size of the reclaim, so a larger recovered amount means a larger fee in dollars. And the word “including” signals that the percentage is one of several fees, not the only one.
What the amendment says about who gets paid
The vendor, not Vanguard, charges the fees. That attribution is explicit in the clause, which uses the phrase “the vendor charges” and not a statement that Vanguard itself charges. Even so, the disclosure sits inside Vanguard’s own account agreement, so the vendor arrangement is written into the contract that governs the brokerage relationship, not into a separate vendor document.
The reclamation service is described as something that “may allow” a favorable withholding rate. That is conditional language. The clause does not promise any particular rate, any particular country, or any particular saving, and it limits the service to securities of issuers based in “certain foreign jurisdictions” without listing them.
The service is described in two parts. One is “foreign tax relief,” which the clause ties to the rate applied “at the time dividend or interest is paid.” The other is “reclamation,” which is the recovery of tax already withheld. The fee language is attached specifically to “the amount of the tax reclaim,” so the percentage is described as a charge on recovered tax, and the clause does not say whether any fee applies when relief is given at payment instead.
The percentage and the vendor are both missing
A reading of the full amendment turns up no figure for the percentage and no name for the vendor. Nothing in the document attaches a fee schedule, a range or a cap. The gap is real, and it matters to anyone trying to judge cost: a one-line disclosure that a percentage exists cannot be compared against the foreign tax amount at stake until the percentage is known.
Vanguard’s notice directs readers to the full updated agreement on vanguard.com, but it gives no separate phone number or form for questions about this clause. A client wanting the vendor’s name or rate would have to ask Vanguard directly, and nothing in the amendment says what answer to expect. Reporting here is limited to what the document states; how the fee has applied in practice to any account is not covered by it.
Fractional shares are excluded from the relief
The clause closes with a separate sentence: “Fractional shares are not eligible for foreign dividend tax withholding relief.” For clients who own foreign securities partly or wholly as fractional shares, for example through dividend reinvestment that leaves small remainders, the service described in 6.t does not extend to those holdings. The amendment gives no further detail on how a position split between whole and fractional shares is treated, so that question also goes unanswered in the text.
Foreign withholding itself is the tax a foreign country takes from a dividend or interest payment before the money reaches the investor. The 6.t clause is about the machinery for lowering or recovering that tax, and the cost of that machinery falls on the client through the vendor’s percentage.
Where 6.t sits among the October 1 changes
The same amendment adds several other provisions: 6.k on the dividend reinvestment program, 6.u on Vanguard ETF conversions, 7.m on a trusted contact, 8.i on online trading and system outages, and 8.j on correction of errors. Of those, only 6.t puts a third party’s fee on the table. The 8.i trading clause is the subject of separate coverage.
The primary record is therefore narrow. The effective date is October 1, 2026, the fee-taker is a third-party vendor, a percentage of the reclaim is one of its charges, and the amendment itself states no percentage. Anything beyond those four points would have to come from Vanguard or from the vendor, and neither appears in the document published with the amendment.
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This article was drafted with AI assistance from the cited official sources and checked against them before publication.
Warren Cohen is a finance writer based in Phoenix, Arizona, covering personal finance topics including credit, banking, and beginner investing. He earned his degree in business administration from Arizona State University and began his career working in consumer finance, where he gained direct experience with lending and credit systems. He now writes for personal finance websites and fintech platforms, focusing on clear, practical content that helps readers make informed financial decisions.
