Key Post The Tax Treatment of ETFs for Irish residents

Tastebuds

Frequent Poster
Messages
95
Almost. However AFAIK you declare the gross dividend on your Irish tax return and claim a credit for the US tax paid.
Thanks, I think I have a clear understanding now of the main differences between ETF domiciles

Im going to get one SP500 and one All world ex US, buying monthly...
That is not too dissimilar to what i want to do: US ETFs exposed to US, Europe and Emerging markets. And using dollar cost averaging monthly. What broker are you going to use? I was going to use Degiro, but i read some things about them that do not give me complete piece of mind. So, I am wondering about what online broker to use

Thanks again. Very helpful replies!
 

nodo

Frequent Poster
Messages
35
A different question.

I have been rereading the information note published by Revenue concerning taxation of EFTs and am slightly worried by the following:

They say that Irish and EEC ETFs are subject to 41% tax on both income and disposals , and this applies on and after Jan 1st 2014.

They say that US ETFs are subject to Income Tax, and CGT and this applies to investments made on or after Jan 1st 2014.


My question is : Are US ETFs purchased before Jan 1st 2014 treated the same as Irish and EEC ETFs ( 41% Tax, No offsetting of losses, and 8 year "roll up " )


I will be grateful to hear if anyone has the definitive answer to this. Thanks.
 

Tastebuds

Frequent Poster
Messages
95
Almost. However AFAIK you declare the gross dividend on your Irish tax return and claim a credit for the US tax paid.
Sorry to bring back the US domiciled ETF tax topic, but I have found that if you hold more than $60,000 in US shares, inheritance taxes apply. Is there a workaround for this one too (like the withholding tax) ?
 

Brendan Burgess

Founder
Messages
37,836
This is a very long thread which I find very confusing.

Any volunteers to do a summary? Or maybe it exists on some other website?

If so, start a new thread. It does not have to be perfect. You can edit it based on the feedback. It would be something like the following. Read back through the thread to see what questions come up most often.

Avoid investing in non US domiciled ETFs because of the tax treatment.
What do do if you already hold them.

The tax treatment of US domiciled ETFs.
Dividends - US withholding tax etc.
the $60,000 issue

You can invest in any part of the world, as long as the ETF is domiciled in the US.

Which is the best broker to deal with


Alternatives

UK Investment Trusts
 
Last edited:

LiamF01

Registered User
Messages
4
This is a very long thread which I find very confusing.

Any volunteers to do a summary? Or maybe it exists on some other website?

If so, start a new thread. It does not have to be perfect. You can edit it based on the feedback. It would be something like the following. Read back through the thread to see what questions come up most often.

Avoid investing in non US domiciled ETFs because of the tax treatment.
What do do if you already hold them.

The tax treatment of US domiciled ETFs.
Dividends - US withholding tax etc.
the $60,000 issue

You can invest in any part of the world, as long as the ETF is domiciled in the US.

Which is the best broker to deal with

Alternatives

UK Investment Trusts
My understanding of revenue's guidelines is that Irish and EU domiciled ETFs for both income from dividends and gains on disposal are taxed at a standard capital gains or income tax rate of 41% but PRSI and USC do not apply to dividend income. For a US domiciled ETF you pay standard CGT (I think 33%) on the gain but on dividend income you also pay PRSI and USC. It should be noted though that when buying non EURO ETFs that the currency will have a large effect on the amount you finally receive when you dispose of them. If you are unlucky and the currency fluctuates the wrong way then the effective rate of loss with CGT could be at least 41%. I think finding a well performing UCTIS EFT with a low fee might be a good way of offset some of the future loss of the varying CGT rates i.e. 8%. I am thinking here of the low fee Vanguard ETFs such as VUSA sold on the Amsterdam Exhange and charging a tiny 0.07% fee but avoiding the uncertainty of currency changes. I hope this helps.
 

leo838

Registered User
Messages
4
I saw somewhere in a paper recently that Canadian domiciled will get similar treatment to US funds but will not be caught by the $60,000 withholding tax. I'm a long way from there at the moment but perhaps in twenty years I'll get there.

I've been looking for a general S&P 500 fund domiciled there but not much success so far:

(can't post links due forum rules but easy to find)
 

joe sod

Frequent Poster
Messages
686
I presume US closed end funds CEFs are treated the same as UK investment trusts for taxation purposes. I think the consensus is that investment trusts are treated like shares (no 8 year deemed disposal etc.). The structure of CEFs is the same as investment trusts you buy them like shares on the stock exchange and their price is not dependant on the investments within the fund. The only thing bugging me is that on the statement issued by my broker they are in the "mutual fund" category seperate from other shares I hold, however they are definitely CEFs.
 

Fella

Frequent Poster
Messages
373
I thought I was fully out of ETF's but noticed I still hold one when looking at my holdings earlier. I know why I kept this one , I bought Ishares FTSE 100 in GBP in 2015 , so I've a position like this , https://gyazo.com/1156b3642971f67497246eff9fae41ff
sterling got weaker probably caused FTSE to rise so they have cancelled each other out , I'm happy to sell now and walk away with -98€ , i'm done with ETF's . My question is will revenue see this the same way as me or will I be expected to exit tax and ignore currency? Do I have to declare anything at all here or can I just sell it and take the loss and not inform revenue. I rang revenue the phone call was painful, they had no idea , I read most forms on revenue and I'm still non the wiser what to do in this situation.
Thanks in advance.
 

smndly

Registered User
Messages
5
Does anyone know if the tax treatment for ETFs also applies to exchange traded notes? (ETNs) can't find anything on revenue about it
 

joiedelivre

Registered User
Messages
2
What's the tax situation if one invests in a US domiciled ETF as a domiciled & tax compliant US citizen who also holds Irish citizenship and currently lives, works, pays income tax in Ireland?
 

landlord

Frequent Poster
Messages
871
What's the tax situation if one invests in a US domiciled ETF as a domiciled & tax compliant US citizen who also holds Irish citizenship and currently lives, works, pays income tax in Ireland?
I believe most if not all of the non US stock exchanges now will not let US citizens register with them, as it is an administrative headache for them regarding the reporting procedures. Somebody else could probably explain this in better detail. Can you join one of the US online stockbrokers while resident in Ireland?
 

jeanneau39

Registered User
Messages
13
Hi,

Have you already completed a form 11 for the etf?is somebody able to confirm if I have to complete the section F line 409? (a)

thank you...I'm running late with the tax return!
 
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