Buying ETF's - US or EU Broker

Discussion in 'Exchange Traded Funds (ETFs)' started by Warren, 14 Mar 2018.

  1. Warren

    Warren Frequent Poster


    I have a US Brokerage account in which I have a $ balance after selling some shares in the US multinational that is my employer. Id like to use the proceeds to purchase shares in a few ETFs.

    I can either buy the ETF's in $'s using the balance in my US brokerage account or I can transfer it into the KeyTrade brokerage account I have in Luxembourg. One of the ETF's Id like to invest in is the S&P 500. If I use the US brokerage account I could just buy the SPDR SPY. If I transfer the money into the EUR Keytrade account Id likely buy a Luxor EFT, like the Lyxor S&P 500 UCITS ETF D-USD LSPX.

    Im trying to think through the trade offs between each approach. The few items I've considered
    - Exchange rate risk should be a wash in that the underlying assets will be US anway so there is $ risk and Im assuming there isnt much difference in the risk level whether I invest directly in $ in my US brokerage account or bring back to EUR and then invest in an European domiciled ETF that invests in US assets

    - Tax implications: Seems like there is an upside to buying the US domiciled ETF relative to bring the money into Europe so that appears to be a strong consideration for purchasing in $ in the US Brokerage account (from following this thread)

    Id appreciate if anyone can point out if there is anything obvious I am not considering?

  2. smarts

    smarts Registered User

    I think the tax implications are the main one, both the tax you pay and the tax the fund pays. Funds domiciled in Luxembourg pay 30% tax to the US on dividends from stocks rather than 15% paid by Irish domiciled funds. Then there is the ETF dividend tax you pay, 41% for Lux ETFs and income tax for US (with exemption of 15%).