Based on my wish to pursue a regular investment plan, investing in broad ETF's that replicate major stock indices over a long term, it's clearly more advantages to use US domicile ETF's. My only concern now is the major currency exposure
I refer to your queries below.
1. If you acquire an interest in an Irish domiciled ETF you do not need to notify Revenue. However, for any year in which you acquire an interest in an EU domiciled ETF then you must notify Revenue of same (via (h) – (j) of line 319 (Offshore Funds) of Form 11).
If you acquire new units each month, you will have a deemed disposal in respect of each acquisition in 8 years time, unless, of course, you sell the units before you’ve held them for 8 years. If you receive a payment (e.g. an annual distribution) from either an Irish or EU domiciled ETF, you must return the details of same on Form 11.
You do not need to complete a Form 11 on each occasion that you receive a payment or have a deemed disposal, rather you will total all payments and/or all gains for the year of assessment and enter the relevant details at (a) – (f) of line 319 of Form 11 and submit the return and payment in the October following the year of assessment. See page 1 of Form 11 for further details in relation to filing/payment dates.
If, say, you commence purchasing ETFs on a monthly basis in June 2015, by the end of 2015 you will have 7 different ETFs. If you hold these investments for 8 years, you will return the total of the deemed disposals of the 7 ETFs on the various dates in 2023 in you tax return in 2024. And so on for subsequent purchases.
2. Because US ETFs are not regarded as having structures and regulation that are similar in all material respects to Irish ETFs, they are taxed as share investments generally. Income payments i.e. annual distributions/dividends will be subject to income tax at the standard or higher rate as appropriate, and gains on disposals will be subject to capital gains tax. The deemed disposal provisions apply to gross roll-up funds only. However, PRSI and USC will apply.
I hope the above helps clarify the issue.
As regards currency exposure with US domiciled ETFs, this is not an issue, for example I own a Vanguard european ETF in a Us account quoted in dollars, even though the european market has gained in the last year the ETF is basically hovering at the value it was a year ago in US dollars, but the euro has depreciated 23% therefore effectively I have ETF worth 23% more in euros than it was a year ago. Of course if I had of chosen a dollar hedged ETF it would have performed much better but I am not american so dollar hedging is not so important to me. At the end of the day you own an ETF which has a basket of shares it is irrelavant what currency those shares are quoted.
That's absolutely crazy so buying the same fund over and over doesn't help with the tax treatment of ETF's , I've gone from buying all world ETF's government bond's emerging markets etc to selling everything and just keeping one world ETF thinking I can buy into that regularly , man I feel pretty stupid now assuming that loss relief would apply in this case.
I'm feeling pretty despondent about the whole thing now and may just take all money out and stick it in the bank , I'm earning money quicker than inflation , this country is a bloody joke , what hope have people got of investing for the future when it's so difficult .
Thanks Marc for your reply , I obviously would sign a petition.
In light of all the above, is any of you guys trading in US domiciled ETFs as an Irish resident? If so, could you give some tips on which (preferably) execution-only services lets you buy these? From what I could find both TD Direct Investing and Davy Select offers only UCITS ETFs.