Buying US stocks...

R

raven

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Is it correct to say that as long as you submit your W8-Ben form to degiro etc, that tax treatment for US stocks here is more or less the same as any other stocks? Ie.CGT on any gains and income tax on dividends?
Any other "gotchas"( obviously some currency risk also), or does that about cover it?

Ps. I did notice the other thread around estate planning re. US stocks, so aware of that also.

Thanks!
 
You'd have to check tax treaties but that is only for dividend income. Otherwise same as Irish stocks. Irish stocks incur stamp duty. I was surprised to find that when i bought Irish stocks abroad that I still incurred stamp duty. So you could consider this but it is very unlikely to be an issue
 
Is there not an estate tax on your American assets if you die?

Estate tax in the United States - Wikipedia

en.wikipedia.org

A non-resident alien is subject to a different regime for estate tax than U.S. citizens and residents. The estate tax is imposed only on the part of the gross non-resident alien's estate that at the time of death is situated in the United States. These rules may be ameliorated by an estate tax treaty. The U.S. does not maintain as many estate tax treaties as income tax treaties, but there are estate tax treaties in place with many of the major European countries, Australia, and Japan.

Brendan
 
After submitting the W-8BEN a 15% tax on dividend income will be automatically deducted for US tax. You report your gross US dividend income to the Irish Revenue (I submit Form 11 and there is a field for it, but I'm not sure if it is the same on other income tax reporting forms) and you will receive a credit for the US tax paid against Irish income tax that you owe on this dividend income. If I remember correctly you only pay Irish CGT when you sell, but I do not know what happens if you die.
 
@Brendan Burgess is correct

This is a massive problem for employees of US multi nationals with stock listed on the NYSE.

$60,000 is your exemption if you are a non resident foreign alien which is basically the whole of the rest of the planet that doesn’t have a US passport

If you are married or in a Civil Partnership this is a big problem on death as you pay Federal Estate tax in the USA at up to 40% with no credit available against Irish CAT.
 
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Does buying in US stock traded on European markets have any impact on US estate tax?
 
Wow never knew this and its relevant to us I think so I'll ask.

My wife works for a multinational and gets a lot of extra benefits through RSUs etc.
Recently I decided to read in detail what happens if she were to die, and the documentation said that the awards would pass to her, they don't if she leaves.

Over the next 5 years the inflow after income tax is substantial.

I presumed that the money/value would automatically just flow to Ireland and be accounted for in her estate.

So, would it be advisable to repatriate funds immediately on maturity?
 
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RobFer said:
Does buying in US stock traded on European markets have any impact on US estate tax?
Click to expand...
Makes no difference.

The legal principle is the “lex situs” where the land or property is located.

Stocks listed on the NYSE are US property and the US has the right to tax in the same way as if it was an apartment in Manhattan.
 
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Chances of death? Unless you are old, it is pretty low.

And while this estate tax is correct, if you look into it, it is largely ignored by non US citizens and residents. There is of course a chance that the IRS may crack down on this with the broker firms or you may want to be wholly tax compliant with the IRS. It is a risk that someone should assess for themselves.
 
“How are the IRS going to know?” is the position I often hear.

To which I reply did you fill in a W8ben to cut the dividend tax to 15%?
Everyone does. You have to. And update it every few years.

So the IRS has to your name, address date of birth and PPS number.

Yeah, how will they ever find out
 
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With 328 million of their own population to look after and being chronically underfunded for years, do they have the resources to go after deceased non residents for relatively small amounts? Especially if they are living in another country? Unless it's for large amounts, they wouldn't bother, it's not worth their while.
 
Perhaps some context would help.

FATCA has been remarkably effective at ensuring financial institutions provide data to the US.

The risk here doesn’t pin on the investor. It’s actually pinned on the personal representatives of the estate. They are effectively declaring that all taxes that are due have been paid in line with their responsibilities

Tax duties​

As the personal representative, you must:

  • notify Revenue of the death
  • settle any outstanding tax issues up to the date of death
  • make sure tax is paid on any income or capital gains that arise during the period when the estate is being administered.

Duties of a personal representative

As the personal representative, you must carry out certain duties within a reasonable time
www.revenue.ie

If money is due to any creditor of the Estate, such as Revenue, they can bring proceedings against the Executor.

Just to give an indication of how joined up international tax collection is now I’ll give a personal illustration.

I took out a credit card with Tesco in the U.K. about 25 years ago.

This year I had a €30 stamp duty dumped on it because stamp duty applies to credit cards in Ireland. It’s not an Irish credit card but that doesn’t matter to Revenue. They can and DID tax it. And that was for just €30!

I was tracked down in the early 1990s for an outstanding Bell of Pennsylvania phone bill (about $3) from when i was at Penn State. That was about 30 years ago. Just imagine what technological advances have happened since then not to mention FATCA and Terrorist financing legislation which gives much more power to the Authorities to obtain information.

Good luck avoiding paying the IRS
 
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Wow that's something that needs serious consideration.
Essentially once the asset is held in the US the holder of those assets are liable on death.
Is the 40% max federal tax the only tax that needs to be considered? ie are there local State taxes on assets after death?
 
This might not apply to everyone here, but I'll mention it.
Many multinationals provide RSUs, TRSUs or simple schemes where employees forgo a portion of their salary and buy stock .
Given what written above these stocks would be liable to the estate taxes mentioned above, but for many the 60k exemption would probably cover any liability.

My wife has RSUs (3 year vesting)TRSUs (5 year vesting) these are subject to income tax on a net share basis and its done via payroll every year.

She additionally buys other more stock in a Revenue approved scheme (€12,700 per annum) with the appropriate tax efficiency of 40%.

I looked at her long term Grant's and if she died they would vest immediately using date of death as the vesting date.

So, reading the above would mean that these would also be subject to the US estate tax ..........am I correct in assuming that?

And who would get paid first, the US and if so what would Revenue here get? Example, Say the Grant's were 100k and after paying estate tax in the US of say $10,000, is the 90k taxed here by Revenue or is it the 100k.

I should add we accumulate shares (net of income tax and we keep dividends US dollars transfer once a year , as an other means of savings, now I'm questioning that strategy.
 
Does this also apply for pensions in tracker funds? - eg a PRSA in a S&P500 index fund or a world index fund, will the tax be liable on this too?
 
Hi can you please advise me how to answer Q 10 on W8BEN form quoting the particular article in the Tax Treaty with USA and the % tax rate applicable to Irish individuals earning money from US Companies
 
It says "if applicable -- see instructions". If you read those instructions, you will see that most people do not have to complete line 10.
 
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