Off Shore / Non US-based ETFs?

Discussion in 'ETFs' started by extraMileage, Apr 20, 2011.

  1. I'm not a US tax payer and it's a shame to get hit with 30% withholding on any income from US ETFs (or US stocks & bonds for that matter).

    What are alternatives (e.g. available on the IB platform)?

    What's the withholding tax treatment on a Dublin-based ETF, for example?

  2. Bob111


    ??? have you ever heard of W8 form? in case if you not:
  3. luisHK


    OP definetely filled a W8 ben form, although digitally, when opening an IB account. Lower than 30% witholding taxes on dividends only work for citizens of countries that have a double tax treaty with the US - and which countries will usually or always withold some more on top of the US witholding.

    Residents of tax friendly countries usually get hammered with 30% - HKgers hear me i'm sure , as they don't benefit from the lower witholding tax applied to neighbouring mainland chinese.

    AFAIK, no matter if there is a double treaty or not, witholding tax on dividends paid by US companies getting more than 80% of their revenues overseas can be claimed back to the IRS. Google is your friend to discover more.

    I've started to check for overseas ETFs but haven't been very succesful so far, many of those ETF lack volume and have higher expense ratios than US based ones, plus if an ETF is issued in a coutry like France, some witholding tax from the french tax department on its dividends will apply, it does works like this with french individual stocks at least. which tracks the Hang saeng is pretty good though, and there is no witholding tax in HK. it's my main buy and hold position (and actually the only one) and I will probably increase it slowly.
  4. luisHK


    Thanks for the link Comintel, I didn't know there was no witholding tax for UK and Ireland based ETFs and will give them a closer look.
  5. Bob111


    i assume that by that OP mean ANY income. that would include ANY capital gains. if he was talking about dividends or interest income-he have to be more specific. i have few friends from eastern europe,they all daytraders and i never heard about any 30% withholding on cap gains,as long as W8 is in good standing. They are paying their taxes at the country of their residence,not in US.
  6. luisHK


    Sorry, I totally missed the " on any income " part. It is strange, if OP is not US related he should only suffer the 30% witholding tax on dividends from the IRS, and if his W8ben is not up to date, it's the back up witholding tax that would apply, abt 28% of the total proceeds of the sales.
  7. Do you want to trade US issued and US listed ETFs as a non-US Citizen or do you want to trade ETFs issued and listed in London, HK, Columbia, Japan, etc.?
  8. zdreg


    i assume etfs are subject to stamp tax in UK, hong kong etc. ie transaction tax.therefore they are not useful for trading purposes
  9. Capital gains are not income.
    #10     Apr 22, 2011