Actually the type of products seems to depend on the country: in some they offer both mutual funds and ETF’s, in others (e.g. Italy) only ETF’s.
I’m in Finland, so it appears I cant access vanguard. They have only a handful of eu countries.
Finland is one of them: https://global.vanguard.com/portal/site/kiids/fi/en/documents . They have closed some funds, but others remain open.
Thanks again Enzo. However I dont understand why people say choose your domicile in Ireland. Surely you need to use the domicile you are tax resident.?
For example, if I’m in Finland, how can I choose Ireland as my domicile for investing in funds?
Probably they mean the domicile of the fund, which determines its taxation (to corporate entities, domicile is what determines tax liabilities, as residency is to individuals). Ireland-domiciled funds only pay to Uncle Sam a 15% withholding tax on the dividends they receive from US companies (due to tax treaty between US and Ireland) and Ireland does not charge any withholding tax on the distributions from the funds to their clients. On the other hand, the US withholding tax on dividends paid to residents in countries without tax treaty (like Hong Kong, where I live) is 30%.
Then of course you’ll have to sort out your tax bill with the Finnish Inland Revenue (for me this problem does not exist, because in HK any income from abroad is tax-free). But I think that you’ll be able to deduct from your bill what Vanguard has withheld on behalf of Ireland’s Inland Revenue, thanks to tax treaties between the two countries: anyway, ask your tax advisor.
Another reason for not holding directly US equities or US-domiciled ETFs and funds is, in case of untimely demise, US Inheritance Tax. That’s not much of an issue for US citizens or residents, given the fact that for them there is an allowance of, if I remember correctly, USD 11.58 million; but for non-US persons the allowance is limited to USD 50,000.
Stay far far away from trading platforms like Etoro. They are highly manipulated and full of fake profiles. Just the other day Etoro was caught altering peoples trades that led to a lot of losses. You can see all the complaints on the Etoro subreddit. I guess Etoro decided that it’s cheaper to get sued than to scam it’s customers.
Anton Kreil exposes how these social trading platforms really work in his video here.
I highly suggest watching the whole video if you ever consider doing any kind of trading on a broker. You will thank me afterwards.
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That’s very true had opened and closed an account on the same day with eToro the spread of the price for too big on the name of commission-free stock trading
Use Interactive Brokers. I am a semi-pro trader and chat daily with many pro traders who trade millions and we all use Interactive Brokers. There is no real alternative, with Saxo Bank second.
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Hi Rod, I’ve recently set up with IB. However, I have a slight issue. I’m currently on a work permit(legal residence) and paying tax, in central Asia. Therefore, my account is under IB LLC. The problem is, if you want to relocate to for example the EU, IB has different T&C’s. Namely, if you invest in ticker VUSA, the dividends can be reinvested under DRIP, but if you are under IB EU, this function is not available. My citizenship is EU.
In essence, maybe I am complicating things for myself, but I want to avoid problems down the line. Nomads are nomads, we don’t want to be restricted, nor do we want to shoot ourselves in the foot.
Any advice would be welcome. The IB staff don’t even seem to know, nor are they willing to provide clear answers.
what exactly is the problem?
Can you not deduce what the problem is from my post?
Basically, changing residence means changing IB platforms, which means it could potentially cause problems with funds already invested in.
No, I couldn’t, sorry.
If IB can’t tell you… but it’s the sort of thing I’d expect would be a problem, certainly.
Unfortunately, this is an issue independent from the particular broker but related to tax rules, which in most cases depend on the country of residence, not on citizenship (an exception being citizenship and permanent resident status in the Land of the Free, which subjects to US tax also income earned by non-residents).
My best advice to you is to remain resident of some country with territorial taxation.
However, some regulatory issues may still sting you: for example, Hong Kong residents like myself may only be clients of Interactive Brokers (Hong Kong) Ltd, not of Interactive Brokers LLC, which means that the SIPC insurance (up to USD 500,000, of which USD 250,000 for cash) is not available, and is replaced by the lousy Investor Compensation Fund of the local Security and Futures Commission (up to HKD 500,000, i.e. about USD 64,000, and ONLY for products traden on the local stockmarket).
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They replied to me and said that if you change residence you need to change account and manually transfer your funds, which takes 1-2 weeks.
I’m currently in central asia but will go back home to europe soon. Therefore I’ll have to set up a new IB EU account eventually.
Its surprising there isnt more info about it on this forum, given the fact it’s called Nomad gate.
I lived in hong kong some years ago, really enjoyed it, but the air was awful. I found HK efficient and painless in relation to doing tax returns. Some countries make a song and dance about it. Especially countries in Europe. Hk is a good country to be a nomad, I’d go back if I could find a worthy job. I work in aviation, and the industry is still on its knees.
Yeah it’s very sad to see the damage that the pandemic has wreaked on the air transportation industry. Other than that, life here is reasonably back to normal, and The Economist recently ranked HK first in its “Global normalcy index”.
The air quality in recent years has got a bit better, largely because in the neighbouring Pearl River Delta region of theMainland the smokestack industries are being replaced bhy less polluting high-tech ones.
THe Hong Kong Inland Revenue is one of the friendliest I’ve ever known: in certain cases where there are different ways to calculate tax (e.g., Personal Assessment, where rental income may be pooled together with salary income) they automatically choose the alternative that results in a lower tax! And any form of investment income (dividends, interests, capital gains) is tax free. No VAT or GST either.
I totally agree with you. HK is very friendly regarding tax, so much so that you don’t mind paying. Anywhere else I’ve been you’re treated with suspicion and tax return is like some sort of a scarey thing, in that they don’t trust you. I think western tax rates are disgraceful. 15-20% should be minimum. Western socialist countries are deluding themselves, and high taxes just stifle the human spirit. In scandinavia, working overtime is decentivised because you get shafted in tax.
Sorry about the late reply @rbairoid. The problem is with the EU. If you are outside the EU there are no problems with IB. If you are in the EU you need to change your IB account. The EU imposes rules around buying US ETFs - i.e. you can not unless you are categorised as a professional trader (which is a complicated subject - you can ask them about it). Ideally you would show proof of residence somewhere outside of Europe. It is really just the ETF problem, so no major big deal - there are EU ETFs you can trade which track the US market but they are less liquid and have higher fees.
Unless @rbairoid is a US citizen or Green Card holder, I think he should prefer Ireland-domiciled ETF’s to the US ETF’s that they mirror: the total witholding tax on the dividends of the underlying stocks would be 15% rather than 30%, and in the deplorable case of an untimely demise his holdings would not be subject to Inheritance Tax. Yes, the TTR is a bit higher and the commissions too (with IB, trading on Euronext Amsterdam costs 0.1% of the traded value capped at EUR 29) but overall it should be more cost effective.
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Thanks Enzo, I’m actually Irish. However I dont live there(too expensive). You are right, I invest in UCITS etfs, Irish domiciled.
Interesting trivia, If you live in Ireland and invest in Irish domiciled efts, you’ll be taxed 41% on gains every 8 years. Stocks are treated differently. This 41% only applies to etfs.
In essence, if you reside in Ireland be careful investing in etfs. If you dont live there, then Irish domiciled etfs are good.
It’s a minefield.
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Hi Rod! You say that IBKR is a good option for a global account/traveller, but I wonder how that is so. I really had no trouble using a bank statement as proof of address to open an account (just this week, actually), but I am a constant traveler, I never really spend 6 months in any single country, the temporary tax residency I had in Georgia expires next month and I don’t really want to be in trouble or have my account/funds blocked because of not following the rules.
So I was hoping you could tell me in what way you find that Interactive Brokers is a good option for a global account/traveller.
I appreciate your help.