List of Countries with 0% WHT on dividend-paying stocks to non-residents taht are accessible on Interactive Brokers

[WorldCitizen99]

Thanks again! I need to digest all this information, even if it looks like for now I'm stuck with the 10% withholding rate.

Yes the Mexican tax authorities are not bothering anybody, I don't know a single Expat that is paying taxes on foreign earned income or capital gains, I know a few guys that have been living in Mexico for over a decade and they've never paid taxes here, if that were to change a lot of Expats would end up leaving, I would happily move to Thailand even if then I would be subject to 15% withholding rate, but Thailand is even less expensive than Mexico so maybe at the end of the year I'll end up the same as before, plenty of Expats and digital nomads living in Thailand and not having to pay taxes, legally! Although that Elite visa is a bit expensive.

I'm going to spend this week digesting all the information in this thread, this is a gold nugget, I would prefer to give my money to charity than any tax authority in the world, at least I'd know where my money is going.

>Yes the Mexican tax authorities are not bothering anybody

Viva Mexico!

OK I found the thing about India:

An investor must be careful when investing in foreign stocks because of certain tax implications. Many countries will tax dividends paid out to foreign investors at a higher rate. So the 7% dividend yield paid out by a company can actually be significantly less if the country deducts a significant amount of withholding taxes. However, some countries, like the U.K., India, and Argentina, do not tax dividends paid to U.S. residents at all. This fact is due to agreements between the U.S. and those countries to not impose dividend taxes on each other.

So it only applies to US residents, not to non-resident aliens.

Cheers

 

[joffreylol]

I don't know if IRS took my cut, I will have to research more. I think that it's actually 0% because it's not physically replicating securities but instead using swaps.

Country Splash

www.invesco.com

Synthetic replication for US equity indices​

Among the largest and longest-running synthetic ETFs are those tracking major US equity benchmarks such as the S&P 500 and MSCI USA indices. While a physically replicated ETF, domiciled in one of the European jurisdictions that has a tax treaty with the US, is subject to reduced withholding taxes on the dividends it receives, a synthetic ETF can receive the gross return of the index, I.E., with 0% dividend withholding tax. As a result, a synthetic ETF domiciled in Ireland can benefit from an additional 15% of dividend values, compared to a physically replicated ETF also domiciled in Ireland.

The basis for this structural advantage is embedded within US legislation. Section 871(m) of the US HIRE Act explicitly excludes swaps written on indices with deep and liquid futures markets from the requirement to pay dividend withholding taxes. This enables a US bank writing the swap to return the equivalent of the gross return of the index to an ETF domiciled outside the US.

 

[Radko]

Viva Mexico!

OK I found the thing about India:

An investor must be careful when investing in foreign stocks because of certain tax implications. Many countries will tax dividends paid out to foreign investors at a higher rate. So the 7% dividend yield paid out by a company can actually be significantly less if the country deducts a significant amount of withholding taxes. However, some countries, like the U.K., India, and Argentina, do not tax dividends paid to U.S. residents at all. This fact is due to agreements between the U.S. and those countries to not impose dividend taxes on each other.

So it only applies to US residents, not to non-resident aliens.

While you are doing your review, see if you can figure this one out: a non-resident alien invests in an ADR on a US exchange that holds only Singapore and HK dividend-paying stocks - do they pay any dividend WHT?

Cheers

"An investor must be careful when investing in foreign stocks because of certain tax implications. Many countries will tax dividends paid out to foreign investors at a higher rate. So the 7% dividend yield paid out by a company can actually be significantly less if the country deducts a significant amount of withholding taxes. However, some countries, like the U.K., India, and Argentina, do not tax dividends paid to U.S. residents at all. This fact is due to agreements between the U.S. and those countries"

Does this mean that if you are a resident of the US and you invest in Indian dividen-paying stocks then India doesn't withhold anything? And viceversa, that if you are an Indian resident, or an Agentinian resident and you invest in the US then the US doesn't withhold anything? It can't be, even if you bought US stocks from an Argentinian Exchange chances are the Exchange will withhold.
In the case of Ireland we know that the fund managers have already paid to the IRS the withholding before they give you any dividends.

Hey, I have two Passports, one of those is from Argentina, did I just win the lottery!! Do I need to move to Argentina, I've never been there in my entire life.... Argentina here I come!

While you are doing your review, see if you can figure this one out: a non-resident alien invests in an ADR on a US exchange that holds only Singapore and HK dividend-paying stocks -

This is a great question, I'm going to research, but there are several possibilities,
If I buy an ADR on a US exchange that holds Singapore, or Hong Kong, or Indian dividen-paying stocks maybe they don't withhold any amount, as long as the Exchange doesn't label you as a non-resident?
But what if we buy US dividen-paying stocks from an Exchange in Hong Kong, or in India that offers an ETF that is traded in their local currency, will the Exchange withhold dividends from us even if we are not living in their country? Will the Indian Exchange inform the US that some of its invertors are not living in India?

Let me do the research and see if there is a way to structure someone's residency in order to avoid the withholding, either from India, HK, Singapore, Argentina to those US residents, and viceversa, first I need to understand what the law exactly says... We do know that if we go to live to the UK and we were to invest in the US, the US would withhold 15%, so we need to understand what that paragraph really means when it says "an agreement between the US and those countries to not impose dividen taxes on each other."

Cheers

PS, Doesn't the IRS have a hotline number we can call and ask "Hey please tell us how to avoid that withholding, We've had enough!"

I don't know if IRS took my cut, I will have to research more. I think that it's actually 0% because it's not physically replicating securities but instead using swaps.

Country Splash

www.invesco.com

Synthetic replication for US equity indices​

Among the largest and longest-running synthetic ETFs are those tracking major US equity benchmarks such as the S&P 500 and MSCI USA indices. While a physically replicated ETF, domiciled in one of the European jurisdictions that has a tax treaty with the US, is subject to reduced withholding taxes on the dividends it receives, a synthetic ETF can receive the gross return of the index, I.E., with 0% dividend withholding tax. As a result, a synthetic ETF domiciled in Ireland can benefit from an additional 15% of dividend values, compared to a physically replicated ETF also domiciled in Ireland.

The basis for this structural advantage is embedded within US legislation. Section 871(m) of the US HIRE Act explicitly excludes swaps written on indices with deep and liquid futures markets from the requirement to pay dividend withholding taxes. This enables a US bank writing the swap to return the equivalent of the gross return of the index to an ETF domiciled outside the US.

I know that Synthetic ETFs use derivatives, namely swaps, to offer exposure to a benchmark, but Synthetic funds have several risks, including counterparty risk, collateral risk, liquidity risk, and potential conflicts of interest. By definition, synthetic ETFs require the involvement of two parties, both of which must live up to their side of the obligation.
I do know that Synthetic ETFs are particularly very effective at tracking their respective underlying indices and usually have lower tracking errors, especially in comparison to the physical funds. The total expense ratio (TER) is also much lower in the case of synthetic ETFs (some ETFs have claimed 0% TERs).

How long have you invested in this type of ETFs? What kind of returns have you been getting? And are you getting dividends on this swaps?

 

[WorldCitizen99]

"An investor must be careful when investing in foreign stocks because of certain tax implications. Many countries will tax dividends paid out to foreign investors at a higher rate. So the 7% dividend yield paid out by a company can actually be significantly less if the country deducts a significant amount of withholding taxes. However, some countries, like the U.K., India, and Argentina, do not tax dividends paid to U.S. residents at all. This fact is due to agreements between the U.S. and those countries"

Does this mean that if you are a resident of the US and you invest in Indian dividen-paying stocks then India doesn't withhold anything? And viceversa, that if you are an Indian resident, or an Agentinian resident and you invest in the US then the US doesn't withhold anything? It can't be, even if you bought US stocks from an Argentinian Exchange chances are the Exchange will withhold.
In the case of Ireland we know that the fund managers have already paid to the IRS the withholding before they give you any dividends.

Hey, I have two Passports, one of those is from Argentina, did I just win the lottery!! Do I need to move to Argentina, I've never been there in my entire life.... Argentina here I come!



This is a great question, I'm going to research, but there are several possibilities,
If I buy an ADR on a US exchange that holds Singapore, or Hong Kong, or Indian dividen-paying stocks maybe they don't withhold any amount, as long as the Exchange doesn't label you as a non-resident?
But what if we buy US dividen-paying stocks from an Exchange in Hong Kong, or in India that offers an ETF that is traded in their local currency, will the Exchange withhold dividends from us even if we are not living in their country? Will the Indian Exchange inform the US that some of its invertors are not living in India?

Let me do the research and see if there is a way to structure someone's residency in order to avoid the withholding, either from India, HK, Singapore, Argentina to those US residents, and viceversa, first I need to understand what the law exactly says... We do know that if we go to live to the UK and we were to invest in the US, the US would withhold 15%, so we need to understand what that paragraph really means when it says "an agreement between the US and those countries to not impose dividen taxes on each other."

Cheers

PS, Doesn't the IRS have a hotline number we can call and ask "Hey please tell us how to avoid that withholding, We've had enough!"

It can't be, even if you bought US stocks from an Argentinian Exchange chances are the Exchange will withhold.

The question is, is a US company listed on an Argentinian stock exchange considered a US company or an Argentinian company? I think it would be considered an Argentinian company (an Argentinian subsidiary of a US parent company)....and so Argentinian WHT would apply (rather than US WHT) bc the subsidiary is located in Argentina.

Does this mean that if you are a resident of the US and you invest in Indian dividen-paying stocks then India doesn't withhold anything? And viceversa, that if you are an Indian resident, or an Agentinian resident and you invest in the US then the US doesn't withhold anything?

I've seen this said on a few different websites but honestly I don't know where the hell they got this from. The tax summary sheets for Argentina and India don't say anything about exempting US residents from WHT. So I'll have to suspend judgement on this for now.

>This is a great question, I'm going to research, but there are several possibilities,
If I buy an ADR on a US exchange that holds Singapore, or Hong Kong.....

I think I found the answer. Singapore and HK wont withhold tax when they pay the dividend to the whatever US company issued the ADR, but when the ADR pays out the dividend to you as non-resident alien investor, they will withhold tax (at 30% or less with a tax treaty) - but could this be the exemption A that we talked about earlier, where the US company gets >80% of its income from foreign business acitivity? Is an ADR considered a company??

>Will the Indian Exchange inform the US that some of its invertors are not living in India?
I think the way it works is that the country where the stock is located will withhold at their default rate (eg 30% for the US) unless you fill out paperwork that claims you are applying for a treaty benefit as a tax resident of a particular country. Then the withholding agent will withhold the reduced rate based on your tax residency

I don't know if IRS took my cut, I will have to research more. I think that it's actually 0% because it's not physically replicating securities but instead using swaps.

Country Splash

www.invesco.com

Synthetic replication for US equity indices​

Among the largest and longest-running synthetic ETFs are those tracking major US equity benchmarks such as the S&P 500 and MSCI USA indices. While a physically replicated ETF, domiciled in one of the European jurisdictions that has a tax treaty with the US, is subject to reduced withholding taxes on the dividends it receives, a synthetic ETF can receive the gross return of the index, I.E., with 0% dividend withholding tax. As a result, a synthetic ETF domiciled in Ireland can benefit from an additional 15% of dividend values, compared to a physically replicated ETF also domiciled in Ireland.

The basis for this structural advantage is embedded within US legislation. Section 871(m) of the US HIRE Act explicitly excludes swaps written on indices with deep and liquid futures markets from the requirement to pay dividend withholding taxes. This enables a US bank writing the swap to return the equivalent of the gross return of the index to an ETF domiciled outside the US.

I love loopholes. This is great. Thanks for the tip!

 

[Radko]

The question is, is a US company listed on an Argentinian stock exchange considered a US company or an Argentinian company? I think it would be considered an Argentinian company (an Argentinian subsidiary of a US parent company)....and so Argentinian WHT would apply (rather than US WHT) bc the subsidiary is located in Argentina.



I've seen this said on a few different websites but honestly I don't know where the hell they got this from. The tax summary sheets for Argentina and India don't say anything about exempting US residents from WHT. So I'll have to suspend judgement on this for now.

>This is a great question, I'm going to research, but there are several possibilities,
If I buy an ADR on a US exchange that holds Singapore, or Hong Kong.....

I think I found the answer. Singapore and HK wont withhold tax when they pay the dividend to the whatever US company issued the ADR, but when the ADR pays out the dividend to you as non-resident alien investor, they will withhold tax (at 30% or less with a tax treaty) - but could this be the exemption A that we talked about earlier, where the US company gets >80% of its income from foreign business acitivity? Is an ADR considered a company??

>Will the Indian Exchange inform the US that some of its invertors are not living in India?
I think the way it works is that the country where the stock is located will withhold at their default rate (eg 30% for the US) unless you fill out paperwork that claims you are applying for a treaty benefit as a tax resident of a particular country. Then the withholding agent will withhold the reduced rate based on your tax residency


I love loopholes. This is great. Thanks for the tip!

Great, so the main question is if an American company trading in a foreign exchange is considered a subsidiary of the parent American company, and therefore that company would be considered an Argentinian company.
I'm going to research that, but maybe asking a broker in Argentina would be the fastest way to get an answer, it would be great but if that was the case and an American company trading in a foreign exchange would be considered a national company because it's considered a subsidiary company, that would make it extremely easy to by pass the IRS WHT Rate.
So personally I think, although I can't be certain, that regardless of the county's withholding rate if you buy an American company through a local broker, the local broker will have to withhold whatever rate the US has set for that country based on their double tax treaty.

Here is the list of countries and their respective withholding rate, there are quite a few with 0% withholding rate on Dividends, Interest, and Royalties (I know you've seen this list but in case someone else wants to check it out.)

Withholding tax (WHT) rates

Description of Withholding tax WHT rates

taxsummaries.pwc.com

Cheers

 

[WorldCitizen99]

Great, so the main question is if an American company trading in a foreign exchange is considered a subsidiary of the parent American company, and therefore that company would be considered an Argentinian company.
I'm going to research that, but maybe asking a broker in Argentina would be the fastest way to get an answer, it would be great but if that was the case and an American company trading in a foreign exchange would be considered a national company because it's considered a subsidiary company, that would make it extremely easy to by pass the IRS WHT Rate.
So personally I think, although I can't be certain, that regardless of the county's withholding rate if you buy an American company through a local broker, the local broker will have to withhold whatever rate the US has set for that country based on their double tax treaty.

Here is the list of countries and their respective withholding rate, there are quite a few with 0% withholding rate on Dividends, Interest, and Royalties (I know you've seen this list but in case someone else wants to check it out.)

Withholding tax (WHT) rates

Description of Withholding tax WHT rates

taxsummaries.pwc.com

Cheers

Found this page

How StashAway select ETFs: Taxes, Net Returns & Tracking Errors

Ready to invest with us? Learn how we select the ETFs that form your portfolio.

www.stashaway.sg

When it comes to buying US stocks, it actually blows away the idea that lower WHT rates lead to better performance
US-domiciled funds that withhold 30% can actually give BETTER net returns because of a few issues:
lower tracking error, lower transaction costs, trading in a more liquid market that trades during US trading hours....

The video at the bottom of the page explains it:

Help Center

Help Center

www.stashaway.sg

Hmm....so for US stocks, Irish-domiciled ETFs with the lower WHT rate may not give you an advantage.

Next I would like to see a comparison between the avg return for an SGX-listed index fund containing only Singapore (and maybe HK) stocks vs a US-listed ETF trading the S&P500 bc the difference in WHT is 30% but all of the above issues are not present.

 

[Radko]

Found this page

How StashAway select ETFs: Taxes, Net Returns & Tracking Errors

Ready to invest with us? Learn how we select the ETFs that form your portfolio.

www.stashaway.sg

When it comes to buying US stocks, it actually blows away the idea that lower WHT rates lead to better performance
US-domiciled funds that withhold 30% can actually give BETTER net returns because of a few issues:
lower tracking error, lower transaction costs, trading in a more liquid market that trades during US trading hours....

The video at the bottom of the page explains it:

Help Center

Help Center

www.stashaway.sg

Hmm....so for US stocks, Irish-domiciled ETFs with the lower WHT rate may not give you an advantage.

Next I would like to see a comparison between the avg return for an SGX-listed index fund containing only Singapore (and maybe HK) stocks vs a US-listed ETF trading the S&P500 bc the difference in WHT is 30% but all of the above issues are not present.

Let me go through this information, I was aware of "lower tracking error."
I've never been a fan of US Irish-domiciled ETFs to be honest, anyone living in Europe can bypass the restrictions imposed by MiFiD when buying US based ETFs by opening a professional account with IBKR, or opening an account directly with a US based Broker.

I will check the avg return of Singapore and Hong Kong index funds that hold only local companies, I've always been focused on the US market so I have no idea.

Thank you!

 

[Radko]

Found this page

How StashAway select ETFs: Taxes, Net Returns & Tracking Errors

Ready to invest with us? Learn how we select the ETFs that form your portfolio.

www.stashaway.sg

When it comes to buying US stocks, it actually blows away the idea that lower WHT rates lead to better performance
US-domiciled funds that withhold 30% can actually give BETTER net returns because of a few issues:
lower tracking error, lower transaction costs, trading in a more liquid market that trades during US trading hours....

The video at the bottom of the page explains it:

Help Center

Help Center

www.stashaway.sg

Hmm....so for US stocks, Irish-domiciled ETFs with the lower WHT rate may not give you an advantage.

Next I would like to see a comparison between the avg return for an SGX-listed index fund containing only Singapore (and maybe HK) stocks vs a US-listed ETF trading the S&P500 bc the difference in WHT is 30% but all of the above issues are not present.

Really nice article! I kind of suspected it but this is great to know.

Maybe finding a country that is in the same time zone and has 0% WTH would make a significant difference over SPY US or SPX Index.

Conclusion:

"Our investment team has given serious consideration to the 30% WHT and have considered other exchanges that have lower or no withholding tax. However, at the end of the day, we have decided to stay with US-listed securities despite the tax implications due to its deep liquidity, reputable fund management and most importantly, the lower tracking error."

Thanks a lot!

 

[koohl]

From the top of my head, yes, only in UK, HK, SG, this is the case.

agree in total with you. Look into SG and HK if you can work with it.

 

[Radko]

I don't know if IRS took my cut, I will have to research more. I think that it's actually 0% because it's not physically replicating securities but instead using swaps.

Country Splash

www.invesco.com

Synthetic replication for US equity indices​

Among the largest and longest-running synthetic ETFs are those tracking major US equity benchmarks such as the S&P 500 and MSCI USA indices. While a physically replicated ETF, domiciled in one of the European jurisdictions that has a tax treaty with the US, is subject to reduced withholding taxes on the dividends it receives, a synthetic ETF can receive the gross return of the index, I.E., with 0% dividend withholding tax. As a result, a synthetic ETF domiciled in Ireland can benefit from an additional 15% of dividend values, compared to a physically replicated ETF also domiciled in Ireland.

The basis for this structural advantage is embedded within US legislation. Section 871(m) of the US HIRE Act explicitly excludes swaps written on indices with deep and liquid futures markets from the requirement to pay dividend withholding taxes. This enables a US bank writing the swap to return the equivalent of the gross return of the index to an ETF domiciled outside the US.

I've checked and yes, synthetic ETFs are not subject to withholding tax as technically you do not receive "dividends" from this type of ETFs, you receive Capital gains, so they are exempt from taxes in the US.
The problem is the risk involved when buying Synthetic ETFs as the ETF doesn't own the underlying assets.

 

[joffreylol]

I'm glad that you checked, it might be useful for someone. My understanding is that since it's an ETF domiciled in EU (UCITS) it's more regulated and safer than synthetic etfs elsewhere but that might not be true. Other big providers usually lend their shares for profit so there is also a risk with physically replicated ETFs from Vanguard and Blackrock as well. I think State Street didn't lend so their S&P500 had higher TER but not sure if that's the case still.

 

[Radko]

I'm glad that you checked, it might be useful for someone. My understanding is that since it's an ETF domiciled in EU (UCITS) it's more regulated and safer than synthetic etfs elsewhere but that might not be true. Other big providers usually lend their shares for profit so there is also a risk with physically replicated ETFs from Vanguard and Blackrock as well. I think State Street didn't lend so their S&P500 had higher TER but not sure if that's the case still.

Synthetic ETFs are inherently more complex than Physical ETFs and for that reason alone most investors should stick to physical ETFs, although there is certainly a case to be made for investing in Synthetic ETFs given the tax advantages, these ETFs have been shown to outperform their physical counterparts, but the biggest drawback of Synthetic ETFs is the due diligence that is required before investing, knowing how many counterparties there are, determining whether the ETF is affiliate to the counterparty, assessing the average level of collateralization, assessing the risk in return profile of the collateral basket, these are all factors that must be considered, not all companies will be forthcoming with the information necessary to assess a Synthetic ETF.

In Europe the collateral has to cover 90% of the value of the Synthetic ETF, the problem is mainly the quality of that collateral as well as who is the custodian of that collateral.

Just for the record, the SEC hasn't allowed the launch of a Synthetic ETF since 2010, so at the moment Europe is the main market for this type of ETFs.

As long as things are working as they should be there is no reason to worry, it's when things, a recession, the collapse of a company, go south that someone should worry as Synthetic ETF's swaps are not as liquid.

So the question is, is the tax savings worth the risk? With Physical ETFs there is zero chance of losing all your money, with Synthetic ETFs it will depend on the quality of each particular ETF, the collateral, and the counterparty.

 

[Bl4ckJackk]

Thank you for this thread as the information in here is really useful and I researched most of this myself.
I could see two ways of getting proper exposure to the US and also global market with long history and 0% witholding and total taxes.
1. I do not know if this is true, and sadly I bet there would still be WHT, but if you could just buy a US domicilied stock, let's say MSFT, but on a UK stock exchange denominated in GBP, and they would apply no WHT as a resident of some random 0 tax country, then you could fairly easily pick a few dozen high quality companies and just make a portfolio and have 0% tax. Sure it is more work than just buying an ETF but it might be worth it to eliminate tax and also have more control over the portfolio this way. But as I said I doubt they would not withhold tax, this would seem too easy to bypass.
2. Do the Synthetic ETF route, this actually sounds rather nice, if there is no WHT, but the risk is definitely there, also there might be higher management fees and bigger spread due to lower liquidity, who knows if it is actually woth the hassle?

To give a bit more light to the accumulating vs distributing ETFs, I understand it this way:
US offers no accumulating ETF because by law for an ETF to avoid taxes in the US it has to pay out at least 90% of its profit to investors as distributions. Since accumulating ETFs technically pey out nothing, this is impossible.
Ireland domiciled ETFs have no such limitation, but obviously, if they hold US assets, there has already been a silent 15% tax cut. So you are gaining nothing. (Unless your country of tax residence has huge dividend tax and tiny capital gains tax) in this case you would lose the silent 15% but the rest would accumulate indefinitely in the ETF untill you decide to sell, at which point you would just pay the capital gains tax. But honesly if oyur country's dividend tax was higher than 15% then I think they would want you to still pay the difference, even if you received nothing.
And then we come to the fact if you actually have to pay dividend taxes on dividends you do not receive. This sounds stupid but even with accumulating ETFs that pay you nothing, in most countries I think you still have to submit reports and pay the tax! This is not the case with poorer countries usually, for instance I looked at Bulgaria and they say that if you received no dividend physically, no need to pay tax on it.
So accumulating ETFs do not really offer any benefits I think.

I've never been a fan of US Irish-domiciled ETFs to be honest, anyone living in Europe can bypass the restrictions imposed by MiFiD when buying US based ETFs by opening a professional account with IBKR, or opening an account directly with a US based Broker.

Would you mind giving a bit more detail about bypassing the MIFID regulations with IBKR? I believe you are talking about the KIID limitation crap which prohibits any EU citizen to invest into US based ETFs? This pissed me off a lot when I found out I cannot just buy SCHD through IBKR. Since the restrictions should apply to citizenship, from what I have gathered you can really only circumvent it by becoming "professional" which requires having EUR500k +, having business experience with investing for at least one year and moving large sums every quarter. There are even more restrictions if you opened an account witk IB-CE and zero benefits for europeans, if I knew I would have opened it with IB-IE.

 

[Radko]

Thank you for this thread as the information in here is really useful and I researched most of this myself.
I could see two ways of getting proper exposure to the US and also global market with long history and 0% witholding and total taxes.
1. I do not know if this is true, and sadly I bet there would still be WHT, but if you could just buy a US domicilied stock, let's say MSFT, but on a UK stock exchange denominated in GBP, and they would apply no WHT as a resident of some random 0 tax country, then you could fairly easily pick a few dozen high quality companies and just make a portfolio and have 0% tax. Sure it is more work than just buying an ETF but it might be worth it to eliminate tax and also have more control over the portfolio this way. But as I said I doubt they would not withhold tax, this would seem too easy to bypass.
2. Do the Synthetic ETF route, this actually sounds rather nice, if there is no WHT, but the risk is definitely there, also there might be higher management fees and bigger spread due to lower liquidity, who knows if it is actually woth the hassle?

To give a bit more light to the accumulating vs distributing ETFs, I understand it this way:
US offers no accumulating ETF because by law for an ETF to avoid taxes in the US it has to pay out at least 90% of its profit to investors as distributions. Since accumulating ETFs technically pey out nothing, this is impossible.
Ireland domiciled ETFs have no such limitation, but obviously, if they hold US assets, there has already been a silent 15% tax cut. So you are gaining nothing. (Unless your country of tax residence has huge dividend tax and tiny capital gains tax) in this case you would lose the silent 15% but the rest would accumulate indefinitely in the ETF untill you decide to sell, at which point you would just pay the capital gains tax. But honesly if oyur country's dividend tax was higher than 15% then I think they would want you to still pay the difference, even if you received nothing.
And then we come to the fact if you actually have to pay dividend taxes on dividends you do not receive. This sounds stupid but even with accumulating ETFs that pay you nothing, in most countries I think you still have to submit reports and pay the tax! This is not the case with poorer countries usually, for instance I looked at Bulgaria and they say that if you received no dividend physically, no need to pay tax on it.
So accumulating ETFs do not really offer any benefits I think.


Would you mind giving a bit more detail about bypassing the MIFID regulations with IBKR? I believe you are talking about the KIID limitation crap which prohibits any EU citizen to invest into US based ETFs? This pissed me off a lot when I found out I cannot just buy SCHD through IBKR. Since the restrictions should apply to citizenship, from what I have gathered you can really only circumvent it by becoming "professional" which requires having EUR500k +, having business experience with investing for at least one year and moving large sums every quarter. There are even more restrictions if you opened an account witk IB-CE and zero benefits for europeans, if I knew I would have opened it with IB-IE.

Regarding Synthetic ETFs is all about how much risk you can tolerate, given that everything that can go wrong will eventually go wrong, I will stay away from Synth. ETFs (I've already had two banks failing on me, liquidation, so I would stay away from banks and only deal with brokers, they are safer and you'll get SIPC protection in the US.)

Regarding getting a Professional account with IBKR is a cynical game of checking two of the options they give you, it's that simple.
Charles Schwab will also let you open an account if you are living in the EUSSR, I haven't checked the requirements needed to let you buy US based ETFs but they shouldn't be much different.
There are other brokers, US based Brokers, that will work with you even if you are living in the EUSSR, I made a list with all of them but I don't have it with me at the moment.
Fidelity will also let you open an account, so you have a few options there (if you're going to buy international stocks and ETFs then IBKR is better, cheaper. If you are only going to buy US stocks and ETFs then Charles Schwab is cheaper, but you can only transfer USD, as you know with IBKR you can have a bunch of different currencies.)
You can always open two accounts, one with IBRK and another one with Charles Schwab, you can transfer securities from IBKR to Charles Schwab but not the other way around.
I'm with Charles Schwab and Fidelity as I only invest in the US, both are great.

IBKR, Charles Schwab, and Fidelity have SIPC protection, so you'll be OK, besides the chances of one of those brokers collapsing are close to zero, but even if they do you'll be protected.

Tastyworks will also let you open and account.

 

[Bl4ckJackk]

Regarding getting a Professional account with IBKR is a cynical game of checking two of the options they give you, it's that simple.

And by this I guess you mean satisfying at least two of the three requirements to become a professional investor in EU, am I right? So it is impossible to get without having half a mil and a year of business experience for IBKR.
Or are you talking about some simple selection between basic/professional account when you register that is automatic? Since I am not aware of anything like that.

 

[Radko]

And by this I guess you mean satisfying at least two of the three requirements to become a professional investor in EU, am I right? So it is impossible to get without having half a mil and a year of business experience for IBKR.
Or are you talking about some simple selection between basic/professional account when you register that is automatic? Since I am not aware of anything like that.

You just have to check two of the options, if you don't have $500K then check that you have the experience working in banking and that you've made a lot of trades during the last few months, check those two options and see what they tell you.

 

[JustAnotherNomad]

This whole thread seems very odd. You mean if you buy Apple shares on the London Stock Exchange, there will be no US withholding tax on dividends?

 

[JimBeam]

This whole thread seems very odd. You mean if you buy Apple shares on the London Stock Exchange, there will be no US withholding tax on dividends?

Than you would have to do that in GBP, meaning you need to exchange USD to GBP and then buy the stock exposing you to the GBP/USD currency risk.

 

[JustAnotherNomad]

Just answer the question...

 

[JimBeam]

Just answer the question...

AFAIK, there will be 15% WHT that will get deducted ("The United States will reduce its withholding rates to 15 percent on dividends to United Kingdom portfolio investors"), still better than 30% but not 0%.