# ETFs in Ireland?



## TSR1000 (1 Feb 2021)

I'm a 23 year old looking to invest some quid to put towards a house in 10/12 years time. Having researched it seems that ETFs would be most suitable for me as I dont want to have to be playing around with something every couple of weeks and would rather put it into something and leave it there long term as it is only losing money if I put it in a savings account. Having done some research deemed disposal seems like an awful pain with revenue not shedding too much light on the tax headache that arises either! Any advice on the tax/process regarding ETFs or any alternative investments would be much appreciated


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## flyingfolly (1 Feb 2021)

Not financial advice. But you can invest in US based ETFs without the tax headache. To do this, you can use First Trade in the US to open an international trading account and invest in some US domiciled ETFs that way (eg. the ARK ETFs)


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## Younginvestor93 (1 Feb 2021)

audioflaps said:


> Not financial advice. But you can invest in US based ETFs without the tax headache. To do this, you can use First Trade in the US to open an international trading account and invest in some US domiciled ETFs that way (eg. the ARK ETFs)


Is this allowed?

I thought Irish investors were not allowed access to these since 2008 or so they stopped allowing Irish investors access to them?


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## flyingfolly (1 Feb 2021)

Its not illegal. The company in the US shouldn't technically allow Irish citizens to sign up according to EU law, but that's on them, not you. Again, this is not financial advice


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## Younginvestor93 (1 Feb 2021)

audioflaps said:


> Its not illegal. The company in the US shouldn't technically allow Irish citizens to sign up according to EU law, but that's on them, not you. Again, this is not financial advice


You would have to worry if they closed your positions on that basis, where would you transfer your shares? You would run into problems there so for that reason the average punter is probably better off in EU accumulating ETFS.


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## Tuttlinghorn (8 Feb 2021)

audioflaps said:


> Not financial advice. But you can invest in US based ETFs without the tax headache. To do this, you can use First Trade in the US to open an international trading account and invest in some US domiciled ETFs that way (eg. the ARK ETFs)


Have you managed to do this recently? 
Etrade won't allow anyone with an EU address to do so...


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## Sarenco (8 Feb 2021)

Younginvestor93 said:


> You would have to worry if they closed your positions on that basis, where would you transfer your shares?


Why would they close your positions?

There’s nothing illegal about holding non-EU ETFs. 

What’s been illegal since 2018 is offering certain investment products to retail investors without a KID.


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## Younginvestor93 (8 Feb 2021)

The





Sarenco said:


> Why would they close your positions?
> 
> There’s nothing illegal about holding non-EU ETFs.
> 
> What’s been illegal since 2018 is offering certain investment products to retail investors without a KID.


The broker could very easily refuse to stop offering the shares to Irish investors. If they shouldn't technically allow it for Irish investors, if they tightened up and adhered to the rules like they should, where would you transfer them then? No other broker seems to offer them to Irish investors?


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## Sarenco (8 Feb 2021)

Sorry but I’ve no idea what you are talking about.

If you hold non-EU ETF shares today there is nothing in the PRIIPs Regulation that would prevent you from selling those shares.


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## Younginvestor93 (8 Feb 2021)

So you can invest in US-Etfs with First Trade and there are no risks? If they stop offering it to you because your residence is Ireland, then you just sell up and take your money elsewhere with zero risk. Obviously moving is not an option because no other broker is going to take you.

Seems so strange, as was posted above they technically shouldn't allow you to do it and are breaking the law to let you. Seems very dodgy they let this happen and don't see how they as a company allow it if it is illegal.


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## Sarenco (9 Feb 2021)

“They” shouldn’t allow you to do what exactly?

Again, all that is prohibited is offering certain investment products to retail investors without a KID.

If you already hold a non-EU ETF there’s no need for you to sell up.  You can continue to hold the shares for as long as you like.


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## Steven Barrett (9 Feb 2021)

If First Trade are in the US, they shouldn't open accounts for people without a US address.  If they are in Europe, they shouldn't let investors invest in US domicile ETFs. The legislation is against the provider, not the customer. 

Steven
www.bluewaterfp.ie


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## flyingfolly (9 Feb 2021)

Tuttlinghorn said:


> Have you managed to do this recently?
> Etrade won't allow anyone with an EU address to do so...



Opened a First Trade account three weeks ago with no issues


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## TheBig40 (9 Feb 2021)

audioflaps said:


> Opened a First Trade account three weeks ago with no issues


Where you able to buy us Dom ETFs? I can see ireland is in the list of regions that allow accounts but didn’t want to set up the account if I still only have access to the same ETFs as Deiagro thanks


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## flyingfolly (9 Feb 2021)

They're available to purchase yes. Again though, none of this is financial advice


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## joe sod (9 Feb 2021)

@Younginvestor93 even in the future if a us brokerage stopped people resident in Ireland buy these etfs they cannot force people to sell them,  that would go against a fundamental property right,  once you own an asset it is yours not the brokerages. Even degiro who are eu domiciled have not forced investors to divest the us domiciled etfs they bought previously,  and I think they allow investors to sell them on the platform aswell.


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## Younginvestor93 (9 Feb 2021)

This is seriously revolutionary then for Irish investors, they have access to cheap US domiciled ETF's taxed at 33%. It seems too good be true....what's the catch?


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## TheBig40 (9 Feb 2021)

Younginvestor93 said:


> This is seriously revolutionary then for Irish investors, they have access to cheap US domiciled ETF's taxed at 33%. It seems too good be true....what's the catch?


Currency fluctuations between € and $ is my main one, it’s just another unknown element. Could easily see the difference between 41% and 33% disappear. For me it’s the deemed disposal at 8 years that’s the concern. I’d really rather just pay the tax when I sell them regardless of 41 or 33 %


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## Sarenco (9 Feb 2021)

Younginvestor93 said:


> It seems too good be true....what's the catch?


Well, US domiciled funds/ETFs are required to distribute all dividend income and realised capital gains - there's no such thing as an accumulating fund in the US.

Also, US estate tax might be a concern.


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## AAAContributor (9 Feb 2021)

Sarenco said:


> US estate tax might be a concern



In practice, how does this work does anybody know?

If I (a non-resident alien, in the jargon I believe) have investments in the form of directly held US shares, say $100,000 of Apple stock, with an Irish stockbroker, and I die and a spouse is the beneficiary:

 - Is the US estate tax levied at 40% on the balance over the $60,000 exemption amount?

 - Will the Irish stockbroker withhold this tax on the in-specie transfer of the asset to the account of the spouse (or on the sale of the shares) or is it a self-assessed tax with responsibility for payment by the estate's executor?

 - If it is a self-assessed tax, will the broker have alerted the IRS via some channel to expect a forthcoming payment?

This must be an issue for high-earning Irish employees with sizeable holdings of US tech companies?


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## Sarenco (9 Feb 2021)

AAAContributor said:


> In practice, how does this work does anybody know?


In practice, it's widely ignored.








						Look who's getting away with not paying this estate tax
					

Foreign holders of U.S. assets who fail to pay estate taxes could be costing the U.S. Treasury billions of dollars.




					www.cnbc.com


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## Steven Barrett (9 Feb 2021)

TheBig40 said:


> Currency fluctuations between € and $ is my main one, it’s just another unknown element. Could easily see the difference between 41% and 33% disappear. For me it’s the deemed disposal at 8 years that’s the concern. I’d really rather just pay the tax when I sell them regardless of 41 or 33 %




Unless you are only going to invest in ETFs that invest in companies listed on the European stock exchanges, you are going to win and lost with currency fluctuations. And even then, a lot of those companies will trade outside the eurozone so their profits will fluctuate too based on exchange rates. The MSCI has 60% US stocks, so even if you buy a euro denominated fund, they will still be buying a lot of US companies in dollars. 

Steven
www.bluewaterfp.ie


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## Tuttlinghorn (9 Feb 2021)

audioflaps said:


> They're available to purchase yes. Again though, none of this is financial advice


Thanks though I wasn't clear in my question
Is it currently possible to purchase a US domiciled ETF on First Trade, if you're registered as an Irish user? 
I dont mean 'are the ETFs listed' but rather have you done it recently  (eg they are listed on etrade, I just can't execute a purchase) 
Thanks!


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## flyingfolly (9 Feb 2021)

Yes its possible to purchase


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## landlord (10 Feb 2021)

Don’t forget the broker etoro....I did a bit of research into them also.....






						eToro for US ETFs and no stamp duty Irish shares
					

I Just downloaded the eToro app and I have my application pending. I remember someone on here saying that this platform can be used to purchase US ETFs. I checked in the trade section on the app for availability on a few very common ETFs such as; VOO SPY XLF QQQ They are all available. How is it...



					www.askaboutmoney.com


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## RedOnion (10 Feb 2021)

landlord said:


> Don’t forget the broker etoro....I did a bit of research into them also.....
> 
> 
> 
> ...


As an EU resident, my understanding is that when you buy a US ETF on eToro, you're not actually buying the ETF, but a Contract for Difference (CFD). 

I'd suggest to do a bit more research into what you're actually buying, especially for long term holdings.

"The eToro trading platform is not an exchange or a market. This means that you can only buy and sell stocks within the eToro trading platform. It is not possible to move open positions out of your eToro account to another broker or to another person. If you open a stock position on eToro, you are not issued a stock issuance certificate or allocated voting rights. Nonetheless, should the company issue dividends, your balance will be updated in accordance with your holdings"


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## TheBig40 (11 Feb 2021)

audioflaps said:


> Opened a First Trade account three weeks ago with no issues


If it’s not too massive a personal question how are you getting funds into your First Trade account, I have one but they don’t seem to allow me to send $$ using CurrencyFair, transferwise revolut, PayPal or any of the other ways I’d normally send cash to the USA.


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## k06351000 (17 May 2021)

TheBig40 said:


> If it’s not too massive a personal question how are you getting funds into your First Trade account, I have one but they don’t seem to allow me to send $$ using CurrencyFair, transferwise revolut, PayPal or any of the other ways I’d normally send cash to the USA.


Came across this thread and have the same question..


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## flyingfolly (19 May 2021)

TheBig40 said:


> If it’s not too massive a personal question how are you getting funds into your First Trade account, I have one but they don’t seem to allow me to send $$ using CurrencyFair, transferwise revolut, PayPal or any of the other ways I’d normally send cash to the USA.


Simple bank transfer? I just send money in USD via AIB banking


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## k06351000 (19 May 2021)

flyingfolly said:


> Simple bank transfer? I just send money in USD via AIB banking



Does it work out quite expensive? Had a look there and it seems to be a €15 fee (would have guessed more) but I presume there is also unfavourable forex rates to drive up the cost.


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## flyingfolly (19 May 2021)

k06351000 said:


> Does it work out quite expensive? Had a look there and it seems to be a €15 fee (would have guessed more) but I presume there is also unfavourable forex rates to drive up the cost.


Yep was 15 euros. But if you're transferring thousands, its not that much really


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## TheBig40 (19 May 2021)

flyingfolly said:


> Simple bank transfer? I just send money in USD via AIB banking


Thanks, I can’t seem to get the required info to align at both ends. Gave up in the end


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## k06351000 (25 May 2021)

flyingfolly said:


> Yep was 15 euros. But if you're transferring thousands, its not that much really



So have finally set up my first trade account and ready to transfer money, just went on to AIB and the cost to transfer 3000 dollars was €2,497 (+€15) but checking xe.com at the interbank rate 3,000 dollars equals 2,448 euro. While I know I will never get this rate it does seem that €64 is too big a fee to make on a 3,000 dollar transfer - would it not eat too much into any potential gains? Or is the point that over a large number of years this amount will not compare to benefit of avoiding deemed disposal?


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## jpd (25 May 2021)

€ 64 is 2% but you will struggle to find something better for that small amount of $


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## k06351000 (26 May 2021)

jpd said:


> € 64 is 2% but you will struggle to find something better for that small amount of $



Thanks I suppose 2% isn’t that bad- I could up the amount to 5,000 but I guess that won’t reduce the percentage impact by much as only the 15 is a fixed fee.

I am also looking into setting up an N26 account to transfer for cheaper.

Does anyone know if the exchange fees can be counted as an expense when calculating CGT?


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## jpd (26 May 2021)

No, exchange fees are not included in the cost as such.

But the cost in a foreign currency must be converted to euros for the CGT calculation - the exchange rate to be used is not specified anywhere, so you could incorporate the exchange fee when calculating your rate. I can't imagine Revenue would refuse that if they ever came to audit your CGT returns


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## k06351000 (29 May 2021)

Has anyone here used tastyworks as a broker to buy US ETF’s. 

I think I can transfer money via currency fair which would save me about 40 euro on every $3,000 transfer. I feel like this makes sense if there is no other good reason to avoid tastyworks. I might even make one purchase on first trade and then use tastyworks in the future. As they have no ongoing fees it probably makes sense to invest with a number of brokers just in case,


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## StephenJ (29 Mar 2022)

For the benefit of this thread, as of 1/1/2022 Revenue have removed their guidance that US ETFs attract the same taxation as general shares.. See the footnote at the bottom of page 2 of the Revenue's ETF taxation manual:
https://www.revenue.ie/en/tax-profe...ins-tax-corporation-tax/part-27/27-01a-03.pdf


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## settlement (29 Mar 2022)

StephenJ said:


> For the benefit of this thread, as of 1/1/2022 Revenue have removed their guidance that US ETFs attract the same taxation as general shares.. See the footnote at the bottom of page 2 of the Revenue's ETF taxation manual:
> https://www.revenue.ie/en/tax-profe...ins-tax-corporation-tax/part-27/27-01a-03.pdf


So this confirms that exit tax and deemed disposal will apply to US ETFs? Which we already suspected I think


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## jpd (29 Mar 2022)

No it doesn't - it just makes it more confusing - the Revenue have added more fog to the position, if that was possible

In this document Offshore Funds: Taxation of Income and Gains from EU, EEA and OECD member states

they say 


> It is important to note that not every fund in the EU/EEA/OECD that is subject to local regulation (for example by the local Central Bank) will fall within this equivalent definition. It is only funds which are similar in all material respects to the Irish fund vehicles which are included


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## StephenJ (11 Apr 2022)

I think everyone here would like to sign this petition to remove the use of exit tax / deemed disposal on ETFs (please share it far and wide!)








						Firma la petición
					

End deemed disposal rule on ETF's




					chng.it


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## hughpearse (25 Oct 2022)

jpd said:


> No it doesn't - it just makes it more confusing - the Revenue have added more fog to the position, if that was possible
> 
> In this document Offshore Funds: Taxation of Income and Gains from EU, EEA and OECD member states
> 
> they say



They have provided a nice flowchart to assist with any confusion:
Tax and Duty Manual Part 27-02-0: Offshore Funds: Taxation of Income and Gains from certain offshore states
Decision Tree 1: Is the investment an investment in an ‘offshore fund’? 



			https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-27/27-02-01.pdf


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## nest egg (25 Oct 2022)

StephenJ said:


> I think everyone here would like to sign this petition to remove the use of exit tax / deemed disposal on ETFs (please share it far and wide!)
> 
> 
> 
> ...


I don't like DD as much as anyone else, the question is what should it be replaced with?
For instance, Switzerland taxes non-distributing ETFs as if they were distributing. The US bans non-distributing ETFs for the same net effect. If the proposal is to abolish it, and not have any other claw back mechanism, that's not a realistic proposition, and campaigns such as these will continue to fall on deaf ears.


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## FintanJ (26 Oct 2022)

tax distributing ETFs under cgt. 
Don’t need to ban non distributing ETFs.


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## joe sod (26 Oct 2022)

@nest egg , ireland is a complete outlier with regard to exit tax. Using Switzerland as the basis for ETF taxation is hardly a great example.  Switzerland is infamous for secrecy and as a haven for rich people to shelter their wealth from taxes elsewhere . It also serves as a safe haven for russian oligarchs and African dictators.
The fact is that ireland is unique among our European contemporaries in having this exit tax regime for simple execution ETFs that have the exact same tickers etc as normal shares.  The reason for this is that nobody else places this distinction between ETFs and shares. If that was the case the tickers would have been constructed differently.  The reason why ETFs were invented in the first place was to make it simple for investors to buy and sell them


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## FintanJ (26 Oct 2022)

As an Irish investor, I am faced with 

Buy ETFs and face higher taxes but get diversification 

Or 

Buy individual shares, hard to diversify but better tax. 

This is a small investor problem in particular. Small investor equals most investors. 

No justifiable reason for keeping existing tax structure for a distributing ETF.


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## nest egg (26 Oct 2022)

joe sod said:


> @nest egg , ireland is a complete outlier with regard to exit tax. Using Switzerland as the basis for ETF taxation is hardly a great example.  Switzerland is infamous for secrecy and as a haven for rich people to shelter their wealth from taxes elsewhere . It also serves as a safe haven for russian oligarchs and African dictators.
> The fact is that ireland is unique among our European contemporaries in having this exit tax regime for simple execution ETFs that have the exact same tickers etc as normal shares.  The reason for this is that nobody else places this distinction between ETFs and shares. If that was the case the tickers would have been constructed differently.  The reason why ETFs were invented in the first place was to make it simple for investors to buy and sell them


US and CH are two countries I've worked in, and am familiar with their taxation systems, which is why I referenced them. Your comment on secrecy has no bearing on the point.

Although the method is unique, Ireland isn't unique in getting its pound of flesh, which is the point.


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## bankrupt (27 Oct 2022)

nest egg said:


> Although the method is unique, Ireland isn't unique in getting its pound of flesh, which is the point.



I expect most investors do not have a problem with paying tax on their gains.  My concern with deemed disposal is how unnecessarily complex it makes what should be a simple investment method.  The rules are not only complex (can you imagine how painful it must be to do a tax return if you were making monthly ETF investments, perhaps of varying size) but are not even completely clear as evidenced by some of the long discussions on AAM.  Even Revenue themselves do not seem to be completely sure how to apply their own rules for ETFs.   In the end it must surely put off many small investors from even attempting to invest using a method that is low cost and simple in so many other countries.


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