As some on this forum are aware, Americans living in Ireland find themselves in an investment Catch-22 as of January 2018. As US citizens they cannot purchase UCITS (European domiciled and regulated) ETFs—at least not outside of a pension account—because of the punitive US tax treatment of PFICs (passive foreign investment companies), but as EU residents they cannot purchase US-registered ETFs without unobtainable KIDs (Key Information Documents) because of EU PRIIPs (packaged retail and insurance-based investment products) regulations under the MiFID II (revised Markets In Financial Instruments Directive) legislation that took effect in 2018.
My understanding though is that MiFID II regulations contain a clause that permits US-based RIAs (registered investment advisors) to buy US ETFs on behalf of American EU residents, and that the regulations are also waived for individuals who meet the (rather stringent) requirements to be categorized as professional investors.
I know that this topic has been discussed before on this forum, but my question is whether there are any Irish financial advisors who would willing and legally able to purchase US-registered ETFs on behalf of dual US-Irish citizens resident in Ireland for a non-exorbitant fee or percentage of AUM. I am asking on behalf of a friend who has recently returned from the US to Ireland with a view to retiring early, and who wishes to supplement his income by investing what I realize is—from the perspective of the financial services industry anyway—the relatively small sum of c. €100,000.
I’m conscious that—even if it wasn’t almost impossible to do so—investing in US-registered ETFs has become relatively less attractive since (unless I’m mistaken) Revenue changed their position again in 2021 and stated that US ETFs, which were previously subject to 33% CGT, are subject to the gross roll-up regime 41% exit tax as of January 2022 (although there has been some talk about the exit tax being revisited), but the taxes my friend would save by constructing a portfolio of individual stocks and bonds would probably be outweighed by the additional complications and tax preparation costs that would be incurred, given the amount of money involved. The intention is to set up as simple a portfolio as possible (e.g. one global stock index fund such as Vanguard’s Total World Stock ETF, and one global bond fund such as Vanguard's Total World Bond ETF) that would involve no investment advice and minimal portfolio management (selling shares for income and rebalancing just once each year).
My understanding though is that MiFID II regulations contain a clause that permits US-based RIAs (registered investment advisors) to buy US ETFs on behalf of American EU residents, and that the regulations are also waived for individuals who meet the (rather stringent) requirements to be categorized as professional investors.
I know that this topic has been discussed before on this forum, but my question is whether there are any Irish financial advisors who would willing and legally able to purchase US-registered ETFs on behalf of dual US-Irish citizens resident in Ireland for a non-exorbitant fee or percentage of AUM. I am asking on behalf of a friend who has recently returned from the US to Ireland with a view to retiring early, and who wishes to supplement his income by investing what I realize is—from the perspective of the financial services industry anyway—the relatively small sum of c. €100,000.
I’m conscious that—even if it wasn’t almost impossible to do so—investing in US-registered ETFs has become relatively less attractive since (unless I’m mistaken) Revenue changed their position again in 2021 and stated that US ETFs, which were previously subject to 33% CGT, are subject to the gross roll-up regime 41% exit tax as of January 2022 (although there has been some talk about the exit tax being revisited), but the taxes my friend would save by constructing a portfolio of individual stocks and bonds would probably be outweighed by the additional complications and tax preparation costs that would be incurred, given the amount of money involved. The intention is to set up as simple a portfolio as possible (e.g. one global stock index fund such as Vanguard’s Total World Stock ETF, and one global bond fund such as Vanguard's Total World Bond ETF) that would involve no investment advice and minimal portfolio management (selling shares for income and rebalancing just once each year).
