How do you decide which exchange to buy from?

L

lb12345

Registered User
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Hi guys,

I've recently moved back to Ireland from Canada and suddenly finding that I need to get up to speed with investment rules/regulations and figure out the most financially efficient way of doing things! I'm hoping the question is straightforward

I'm sold off my portfolio in Canada and am looking to re-buy some of what I held there again but I can't figure out which exchanges make more sense to buy from. For example, let's say I want to buy Visa. Using DeGiro, I have the option of buying from the NYSE or on the Frankfurt exchange. The fees for buying US-based stocks are much lower than EU-based ones, but does it make more sense to be buying in Euro? However, given that there is going to be a much higher volume buying $V on the NYSE, does it make sense just to buy there and deal with currency fluctuations? Finally, are there any differences in terms of tax treatment?

Thanks in advance!
 
If it's a US company, I'd tend to buy in USD given the option, due to currency exchanges. No greater science to my feeling.

For tax, if you fill out the W-8BEN form (I think that's what it's called), it should partially deduct the tax on dividends same as when you were in Canada, and then you declare the rest as income tax on your tax return. Whereas if you buy from a European exchange, you're solely responsible for declaring income tax on the dividends in your tax return.

With DeGiro, bear in mind they have annual costs for having an open position if you buy on certain exchanges, so I'd tend to limit the number of exchanges I've bought on.

If you're into ETFs, I find justetf.com great, and there's a good thread somewhere here where both I and another guy have done excel sheets going into the nuances of taxes on ETFs (spoiler alert: in a low capital growth, high dividend growth world, buying ETFs which Accumulate their dividend in the fund in Europe can be better, and vice versa)
 
if you are living in Ireland, buying European ETFs is not necessarily a good idea because of the deemed disposal rules. You would bebetter off, imho, buying a selection of shares which mimic the ETF you are considering.

If you already owned ETF, then whether you sell them and buy shares or just hang onto them is a bit more nuanced
 
If OP wants to delve into the topic further, the analysis is at: https://www.askaboutmoney.com/threa...or-irish-residents.199443/page-4#post-1589165
 
jpd said:
You would bebetter off, imho, buying a selection of shares which mimic the ETF you are considering.
Click to expand...

Sorry but that is not going to happen, even if you had a few million in the portfolio to start with.
 
Hi ib

Not sure if you fully appreciate it, but if you buy Visa shares, it does not matter what currency you buy and hold them in, other than the small differences in transaction costs. You will own a US$ denominated investment. (I assume Visa is a US$ share.)

I assume you are not resident and domiciled in Ireland. If not, then you should get professional advice as to the most tax-efficient way to proceed.

I agree with JPD. Buy a few of the underlying shares directly. They won't track the ETF exactly, but they will "mimic" it, i.e. a reasonable impersonation.

Brendan
 

Thanks for your reply. I probably wasn't clear in my post, but I'm now resident and domiciled in Ireland. I've closed off my tax obligations to Canada by selling everything in the 2018 tax year, but would like to buy those same stocks again over here. I used Visa as an example as I now have the option of either buying it from the Frankfurt exchange or the NYSE (I didn't have this option using my Canadian broker).

Are there any differences in owning the stock in either exchange (e.g. volumes, taxation etc)? Do they mimic each other?
 


Thanks for your reply! I was about to just buy $V on the NYSE because that's where I held it before, but when I saw the option to buy on Frankfurt in Euros, it made me wonder what the advantages/disadvantages were.

Thanks for the tip about DeGiro and the fee for open positions...I didn't notice this at all when I looked at their fee schedule so I'll have another look!
 
I just had a look at my account, now I'm on a custody account so maybe I'm different to standard accounts, but the fee appears to be €2.50 per annum per exchange.
It's given as:

01/02/2018 18:01:17 31/01/2018 DEGIRO Exchange Connection Fee 2018 (Australian Securities Exchange (ASX) - ASX) -EUR 2.50

01/02/2018 18:01:17 31/01/2018 DEGIRO Exchange Connection Fee 2018 (NYSE Arca - NYA) -EUR 2.50

01/02/2018 18:01:17 31/01/2018 DEGIRO Exchange Connection Fee 2018 (OMX Stockholm - OMX) -EUR 2.50

01/02/2018 18:01:17 31/01/2018 DEGIRO Exchange Connection Fee 2018 (Euronext Paris - EPA) -EUR 2.50

01/02/2018 18:01:17 31/01/2018 DEGIRO Exchange Connection Fee 2018 (Euronext Amsterdam - EAM) -EUR 2.50

01/02/2018 18:01:17 31/01/2018 DEGIRO Exchange Connection Fee 2018 (Borse Frankfurt - FRA) -EUR 2.50

01/02/2018 18:01:17 31/01/2018 DEGIRO Exchange Connection Fee 2018 (Xetra - XET) -EUR 2.50

Also bear in mind the purchase cost on Frankfurt can be more expensive (I think €10? versus ~€2.50? on NYSE)
 

I had a dig around their website and found it under the 'other fees' section! You're right, it's €2.50 per exchange per year (outside of your home exchange i.e. ISE

Frankfurt is definitely expensive at €7.50 per trade while NYSE is only €0.50. I'm used to being charged $7.99 per trade in Canada so it would be nice to avail of the lower fees now
 
@lb12345
What exchange did you end up choosing?

I'm curious because I'm now at the same hurdle as yourself and I'm leaning towards the NYSE as the fees are lower.

I've been looking at Xetra vs NYSE for a bunch of USD stocks (Like Shopify for instance), and the NYSE is 9 times less expensive.
52 cent vs around €4.50.
The NYSE is also more liquid, and has lower spreads.
The 0.10% foreign exchange conversion rate that Degiro's AutoFX triggers is a meagre amount.

I don't see why you'd want to purchase stocks on a European exchange and pay multiples more in transaction costs.
 
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