Key Post The Tax Treatment of ETFs for Irish residents

Discussion in 'Exchange Traded Funds (ETFs)' started by Marc, Apr 16, 2015.

  1. Tastebuds

    Tastebuds Frequent Poster

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    Thanks, I think I have a clear understanding now of the main differences between ETF domiciles

    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!
     
  2. nodo

    nodo Frequent Poster

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    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.
     
  3. Tastebuds

    Tastebuds Frequent Poster

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    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) ?
     
  4. Joey101

    Joey101 Registered User

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  5. Brendan Burgess

    Brendan Burgess Founder

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    Last edited: Jun 27, 2016
    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: Jun 27, 2016
  6. LiamF01

    LiamF01 New Member

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    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.
     
  7. Gordon Gekko

    Gordon Gekko Frequent Poster

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    What about the 8 year rule (i.e. deemed disposal)?

    For long term holders, it affects returns...
     
  8. leo838

    leo838 New Member

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    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)
     
  9. joe sod

    joe sod Frequent Poster

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    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.
     
  10. daheff

    daheff Frequent Poster

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    Can I offset ETF gains against the annual CGT exemption (1270 eur)?
     
  11. username123

    username123 Frequent Poster

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    Only for non-UCITs ETFs i.e. mainly US and Canadian. UCIT ETFs are absolutely nothing to do with CGT, tax and annual allowance.
     
  12. daheff

    daheff Frequent Poster

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    deleted -duplicated post
     
  13. daheff

    daheff Frequent Poster

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    How do you report UCIT ETFs to revenue to tax gains then?
     
  14. username123

    username123 Frequent Poster

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    daheff likes this.
  15. daheff

    daheff Frequent Poster

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