ETFs and capital gains tax

fistophobia

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97
Well spotted. Yes, it is US domiciled, non-UCITS, but priced in USD, also check out the distributions.
 

galway_blow_in

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Galway,

Look for the ISIN number for the ETF you want to invest in. If it starts US, it's US based. If it starts IE, it's Irish etc


Steven
www.bluewaterfp.ie
thanks steven but the ISIN doesnt appear to be listed on most sites

can you tell me if the followings european ( or eurozone ) etfs which are dollar denominated are U.S domiciled
https://www.ishares.com/us/products/239644/ishares-msci-emu-etf

https://www.ishares.com/us/products/264617/ishares-core-msci-europe-etf
 
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galway_blow_in

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Well spotted. Yes, it is US domiciled, non-UCITS, but priced in USD, also check out the distributions.
i think the american ones are all distributing rather than accumulating ? , i dont think it really matters that much that its priced in dollars , there may be euro denominated etfs which are u.s domiciled but i imagine liquidity is pretty thin
 
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galway_blow_in

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hi again

ok , ive finally settled on an etf which i believe gives very strong sector and geographical diversity , ive deliberately avoided the usa as i think its not cheap enough , anyway the etf is VEA

can anyone confirm is this is u.s domiciled , i suspect it is but i cannot see the ISIN code no matter how hard i look

thanks
 

orka

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1,010
anyway the etf is VEA

can anyone confirm is this is u.s domiciled , i suspect it is but i cannot see the ISIN code no matter how hard i look
Various providers/info services have searchable ETF lists - for example, Internaxx (used to be TD International) http://www.internaxx.com/iframe/etf-selector - you can find the VEA ISIN from this. You can also search ETFs by sector, geographic area, provider, accumulating/distributing etc.
 

whatsmoney

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76
For iShares ETFs you can check the domicile easily below
https://www.blackrock.com/latamiberia/products/product-list#!type=ishares&tab=overview&view=list
https://www.ishares.com/uk/individual/en/products/etf-product-list?siteEntryPassthrough=true&locale=en_GB&userType=individual#!type=emeaIshares&tab=overview&view=list

Here is the list of Vanguard ETFs, but domicile not listed
https://investor.vanguard.com/etf/list?assetclass=stk#/etf/asset-class/month-end-returns

However, as already mentioned, you can check in whatever Online share account you are using what the ISIN number is... in degiro
it's listed under the ETF name, when you do a search for the ETF under the Quick Order button. US = USA, IE = Ireland etc
 

Mesmer

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I have a questions regarding the capital gains tax exemption. Please correct me if I'm wrong but the way I understand it is that tax payed on gains from ETFs domicile in Ireland or EU (only UCITS) is not treated as capital gains tax but subject to income tax. Does this mean the CGT exemption of €1270 does not apply?
 

Sarenco

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Irish/EU domiciled funds/ETFs are not subject to income tax or CGT - they are subject to a special exit tax regime. There is no annual exemption from this exit tax.
 

Mesmer

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Thanks for your quick reply Sarenco. I've only started to look into this but it seems to me that taxes on ETF gains in Ireland are disproportionately high compared to the tax treatment of ordinary shares. I know for example in Germany ETFs are treated like any other shares and taxed the same way which, due to the simplicity of the product and their low TERs, has made investing in ETFs hugely popular over there. In Ireland it feels a bit like they want to discourage people from investing in ETFs. Anyway, that's for another thread.
 

Sarenco

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Well, US domiciled ETFs are treated like any other US shares for Irish tax purposes.

It's actually not so clear cut that Irish/EU domiciled ETFs are less advantageous than non-Irish/EU domiciled ETFs - it very much depends on the assumptions made and an individual's marginal tax rate. The discussion on this thread from post #24 onwards goes into this point in some more detail -
https://www.askaboutmoney.com/threads/is-it-mad-to-pay-off-a-cheap-tracker.193088/page-2

There have also been rumours that exit tax will be reduced (in line with DIRT reductions) in the next budget.
 

AJAM

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You won't find a US Dom ETF that doesn't pay dividends, but a good alternative is buying some Berkshire Hathaway stock.
Run by the famous Warren Buffet, the company owns 100's of other companies. As a result it is kind of like a mutual fund that owns lots of companies, hence you get the benefit of diversification by only holding 1 stock (just like an ETF). However Berkshire does not pay a dividend. They hold their cash and reinvest it.

2 caveats. Berkshire is currently sitting on 100 Billion USD of cash. Some people are speculating that this will "force" them to pay a dividend. Personally I think they will continue to hold cash until they find attractive opportunities to deploy it. Secondly Warren is in his mid 80's now. Many people have speculated that Berkshire stock will drop when he passes away.
 

MrEarl

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Charlie Munger is 93 and seems to be still going strong.... perhaps Warren and Charlie will outlive us all ? :)

You are correct about people being concerned about what might happen if and when one or both of these guys die. I have no idea what the succession planning is like at B.H. but I think most people feel that the B.H. party will be as good as over, once these two guys depart. That's a real shame, as the investments in their portfolio are probably suitable to hold indefinitely, so B.H. shares could start throwing off regular dividends (assuming you are happy to receive US$ dividends etc.).
 

SBarrett

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Well, US domiciled ETFs are treated like any other US shares for Irish tax purposes.

It's actually not so clear cut that Irish/EU domiciled ETFs are less advantageous than non-Irish/EU domiciled ETFs - it very much depends on the assumptions made and an individual's marginal tax rate. The discussion on this thread from post #24 onwards goes into this point in some more detail -
https://www.askaboutmoney.com/threads/is-it-mad-to-pay-off-a-cheap-tracker.193088/page-2

There have also been rumours that exit tax will be reduced (in line with DIRT reductions) in the next budget.
I mentioned in another post that I was at a seminar where a tax advisor said the gross up regime is more advantageous than paying CGT plus income tax on dividends every year, except where you have capital losses. Didn't get to see his assumptions though.

While deemed distribution and the high exit tax is a pain, gross roll up is brilliant. Having dividends reinvested each year without any tax liability should not be underestimated.

Steven
www.bluewaterfp.ie
 

PGF2016

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306
You won't find a US Dom ETF that doesn't pay dividends, but a good alternative is buying some Berkshire Hathaway stock.
Run by the famous Warren Buffet, the company owns 100's of other companies. As a result it is kind of like a mutual fund that owns lots of companies, hence you get the benefit of diversification by only holding 1 stock (just like an ETF). However Berkshire does not pay a dividend. They hold their cash and reinvest it.

2 caveats. Berkshire is currently sitting on 100 Billion USD of cash. Some people are speculating that this will "force" them to pay a dividend. Personally I think they will continue to hold cash until they find attractive opportunities to deploy it. Secondly Warren is in his mid 80's now. Many people have speculated that Berkshire stock will drop when he passes away.
I read yesterday that they are holding the cash and waiting for a correction in the market so that they can available of lower prices. I'm sure it was speculation but it might not be too far wrong.
 
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