US Online Stockbroker - Dividends, CGT and ETF's

[ronaldo]

Hi,

I'm in the process of applying for an account with Interactive Brokers and just need to transfer the funds now. I've a few questions before I lodge my money:

1. I'm with AIB, what are the charges for transfering money to my account?
2. How does payment of dividends work? Are they paid directly into my online account?
3. How much tax is withheld from the dividends for:
   • UK Shares,
   • European Shares,
   • US Shares.
4. What would the situation be with dividends if I were to buy ETF's that are quoted on the Euronext exchange in Paris or would I need to open an account with an Irish broker for this?

Thanks you.

 

[room305]

Can only answer some here.

1. I paid €24 total but I've signed up for online transfers which will be cheaper.
2. Should be paid into your online stockbroker account. I'm with Firstrade and you can designate that they be automatically used to purchase more shares and they will do this for free.
3. DWT is 15% in US, there is a double taxation agreement so you pay the balance to revenue (dividends taxed at marginal rate). I presume the rate varies from country to country even within the EU.
4. I don't think ETFs pay dividends (at least not to the individual shareholders, they are rolled into the fund).

 

[silvamuppet]

I'm with AIB, what are the charges for transfering money to my account?

Not sure what AIB's charges for transferring are. BOI is about 10 euro.

not sure how IB arrange their transfers , I'm with ETrade and they have various transfer mechanisms depending on the currency you are sending over and the base currency of the account you are transferring to. This is important as the first time I did it I transferred from my BOI account (euro) to my etrade account (USD as I'm buying US based stocks atm). This meant transferring to ETrade's Citibank account in london before it got sent to the states. Some cash was lost in translation in charges and rates between BOI and Etrade (note not BOI, all they took was their tener transfer charge). BOI recommended that I convert to Dollars over here in branch and then do the USD to USD transfer directly between them and etrade's account in Bank of New York and cut out any middle bank and potential extra currency conversion.

You might want to check this out before you transfer anything.

 

[efm]

3. DWT is 15% in US, there is a double taxation agreement so you pay the balance to revenue (dividends taxed at marginal rate). I presume the rate varies from country to country even within the EU.

Make sure you complete a W8-BEN to confirm your non residency status.

 

[silvamuppet]

2. Should be paid into your online stockbroker account. I'm with Firstrade and you can designate that they be automatically used to purchase more shares and they will do this for free.

Unless you need the dividends as a source of income the DRIPs (dividend reinvestment) are definitly the way to go. Don't think you get hit for income tax on them, just CGT when you eventually sell them.

 

[room305]

Don't think you get hit for income tax on them, just CGT when you eventually sell them.

No, you are still liable for income tax on dividends regardless of whether or not you avail of the DRIPs. Otherwise you could avail of the scheme and immediately sell your shares to avoid paying income tax on dividends.

 

[dunkamania]

Hi,

1. What would the situation be with dividends if I were to buy ETF's that are quoted on the Euronext exchange in Paris or would I need to open an account with an Irish broker for this?

US broker is unlikely to cover Euronext,and if they do it would probably be more expensive.
Most ETF's traded on Euronext are also available in Crest and the other big exchanges.
Euronext etf shares are more likely to trade at a slight premium then other markets.
ETF's can pay dividends

 

[Del3D]

Hi,

1. I'm with AIB, what are the charges for transfering money to my account?
2. How does payment of dividends work? Are they paid directly into my online account?
3. What would the situation be with dividends if I were to buy ETF's that are quoted on the Euronext exchange in Paris or would I need to open an account with an Irish broker for this?

Thanks you.

1. I transfer money to Interactive Brokers from AIB using the on-line service -for free! (limited to €5k per day - you will need a "code card" - this can be applied for online and is free)
2. Dividends are paid directly into your account.
3. I have ETFs bought on Euronext (cost €4 per purchase), but have not yet been paid a dividend (dividends depend on the etf)... I don't see why it would not be paid directly into your account.

You are responsible for all tax returns!