Vangaurd S&P EFT

carefree1974

Registered User
Messages
5
Hi all,

This should be a simple question but with the tax treatment of different EFT's it is not. I am looking to invest in a simple Vangaurd EFT that tracks say the S&P that I don't have to pay tax on after 7 years. Looking at Davy.ie and Degiro.ie I am not sure which fund allows me that and was hoping someone may have already identified such a fund. Thanks in advance.
 

Sarenco

Frequent Poster
Messages
5,495
Well, if you invest in a US domiciled ETF you will have to pay income tax at your marginal rate (plus USC and PRSI) on all distributions received and CGT on any gain whenever you sell. US funds are required to distribute all dividends and realised capital gains.

Alternatively, with an Irish/EU domiciled (accumulating) ETF you simply pay 41% exit tax on disposal, with a deemed disposal after 8 years. It's worth noting that if you sell after 8 years for less than the value of the ETF on the deemed disposal date, Revenue will refund you the difference.

Which is the better option for you depends on your marginal effective tax rate and whether you are carrying losses forward (or might generate such losses elsewhere).

As a matter of interest, is there a particular reason why you want to invest in a fund that tracks the S&P500?
 

Jim2007

Frequent Poster
Messages
2,105
Alternatively, with an Irish/EU domiciled (accumulating) ETF you simply pay 41% exit tax on disposal, with a deemed disposal after 8 years.
Out of interest, do you happen to know what the story is with funds domiciled in Switzerland and Liechtenstein? Gains from investing are tax free here in any case, so I never gave it a thought.
 

Sarenco

Frequent Poster
Messages
5,495

carefree1974

Registered User
Messages
5
As a matter of interest, is there a particular reason why you want to invest in a fund that tracks the S&P500?
I generally invest in US equities and I have a mixed record, some nice gains but some not so nice equities. I am looking to set up a regular investment and a currency hedged S&P fund is the best in my opinion. Over 100 odd years the S&P gives a very good compounded growth. This is a long term regular monthly investment and that's why the S&P appeals. Ideally there would be no dividend distributions etc, rather just leave the money compound as not looking for short term income etc.

I understand the tax rules, what I don't understand on the Davy or Degiro sites is which funds fall into which tax category.
 

Sarenco

Frequent Poster
Messages
5,495
Look at the ISINs (international securities identification number) - US domiciled funds start with US, Irish domiciled funds start with IE, etc.

US domiciled funds are required to distribute all dividends and realised capital gains - you won't find an accumulating US domiciled fund.
 

carefree1974

Registered User
Messages
5
Look at the ISINs (international securities identification number) - US domiciled funds start with US, Irish domiciled funds start with IE, etc.

US domiciled funds are required to distribute all dividends and realised capital gains - you won't find an accumulating US domiciled fund.
Cheers, looks like I cannot win either way. To accumulate I need an IE fund but then pay tax on notional gains as such. A little more thinking to do so..
 
Top