Would anyone happen to know what the situation is regarding estate taxes on ownership of US stocks by non resident foreignors? I regularly invest in US stocks (through a UK based broker) and to date i was under the impression that the US does not withhold taxes on sales and capital gains and only partly taxes dividends (depending on treaty agreements) by non resident non US citizens. However, it was recently brought to my attention that the US would withhold estate/ gift taxes if the shares were transferred from me either as a gift or inheritence to my family upon my death. Is this correct and if so, are there any sensible ways around this, such as holding the shares in a company ? Thanks in advance.
"Some Nonresidents with U.S. Assets Must File Estate Tax Returns Deceased nonresidents who were not American citizens are subject to U.S. estate taxation with respect to their U.S.-situated assets. U.S.-situated assets include American real estate, tangible personal property, and securities of U.S. companies. A nonresidentâs stock holdings in American companies are subject to estate taxation even though the nonresident held the certificates abroad or registered the certificates in the name of a nominee." http://www.irs.gov/businesses/small/international/article/0,,id=156329,00.html Sell all your US stocks before you die or invest in offshore mutual funds that hold US stocks.
Thank you for the clarification. Are there any sensible ways around this? (I dont like buying funds, prefer to do my own stock picking)