Key Post The Tax Treatment of ETFs for Irish residents

Marc said:
Unfortunately each time you make a purchase of a UCITs ETF its treated as a distinct investment even if it is in the same "fund"

So you will have to pay tax on your gains even if some of your investments are showing a loss

The Sunday Business Post has a supplement on fund investing this weekend which I was asked to contribute to.

Just a thought but who would be willing to sign a petition to lobby to get this crazy situation changed?
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Hi Marc, did you give any more thought to a practical approach for a petition, or was this just general musings? I'm humming and hawing about my current UCITS ETFS due to no loss relief.....


I had my investment strategy all ready to go with etfs until revenue clarified the tax. Now I don't know what to do. I want stock and bond market exposure but not by an expensive mutual fund. Any ideas? Or are etfs best option to out perform deposits using DIY investing, even with tax disadvantages? I have neither time or knowledge to pick individual shares....
 
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In light of all the above, is any of you guys trading in US domiciled ETFs as an Irish resident? If so, could you give some tips on which (preferably) execution-only services lets you buy these? From what I could find both TD Direct Investing and Davy Select offers only UCITS ETFs.
 
landlord said:
I moved from TD waterhouse to Degiro because they had a much better choice of ETF's
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Thank you for the reply, I have also looked into Degiro (in fact opened an account with them), and can see that they have what I need for amazing prices. The catch for me here is that I read some posts on a blog (sounds silly, I know) about potential issues with them.

Do you happen to know of any alternatives to Degiro that offer these US ETFs?
 
trickortrade said:
In light of all the above, is any of you guys trading in US domiciled ETFs as an Irish resident? If so, could you give some tips on which (preferably) execution-only services lets you buy these? From what I could find both TD Direct Investing and Davy Select offers only UCITS ETFs.
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Sorry I was repsonding to this, should have quoted it

which EU UCITS can you not buy? Ones listed in Amsterdam? Or anywhere in the EU?
 
Form 11 is only submitted once a year so you have to tally up per ETF, otherwise you'd be returning 12 form 11s, one per purchase, which is definitely wrong.

That was directly from revenue so I'm happy to go with their response.
 
What do you mean " had the reply"? I also got my reply by email from her. Surprised she gave conflicting information as she seemed very knowledgeable
 
I just mean had that reply sorry. She did seem knowledgable I don't doubt you received that email , is there a reason revenue have made this so complex , what chance has anyone especially those who don't view this website of figuring it all out , there is too much conflicting for me to stay invested in them.
 
Who knows why they did so but it's rather annoying to say the least. I'm sticking with the advice I received from them, it's in writing, so what else can we do!
 
Hi Username123, I've only just set my own account with degiro in the last couple of weeks in order to get some exposure to the markets. Through reading the information available on this forum and other online sources I think its crazy to buy any UCITS ETFs at the minute. How these funds are taxed is unfair and you're on the backfoot from the start once a UCIT fund is down.

With this is mind I've purchased 4 US ETFS through the NYSE ARCA exchange - these mainly cover the US/Europe markets. As I'm only new to investing I've only started with a small amount of cash until I become more comfortable. I purchased in early December so at the minute I'm down but intend holding these long term so I'm not overly worried. As these funds are USD based i've a currency exposure and also none of the funds are accumulating but at least I can offset loses against gains which is a major advantage over UCITs. Gains are taxed at CGT rates as opposed to 41%.

Hopefully the tax situation of UCITs will change but for the moment I'm sticking to US etfs.
 
What sort of charge do Degiro levy on buying the US ETFs? I know its E2 plus 0.02% of the amout when I bought on Amsterdam exchange in euro, but I assume there are extra charges for currency exchange when buying on NYSE etc.?
 
All I paid was €2 + 0.02% so it worked out at €2.15 approx. for each trade. I bought when the exchange was at $1.09 and I received the same rate. I'm sure there was a built in margin of some small percentage to the market rate but it was minimal. Compared to what some brokers charge it's a bargain.
 
I was using UCIT but am now moving to US ones. The tax is just silly on UCIT ones, especially lack of loss relief. That's killer for me. Im going to get one SP500 and one All world ex US, buying monthly and sell/pay CGT when I want, not forced to do so after eight years.
 
Im using Degiro. For montly buys, no other broker is really cost effective.
 
landlord said:
I second that !!!!
So far I've experienced great service and great prices.
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The problem for me is that they only take EUR deposits, my money is in USD and I want to buy US domiciled ETFs.
I find annoying that I have to change my money from USD to EUR to move it to Degiro, and then paying Degiro fees toconvert it back to USD to trade US ETFs.

Does anybody know a broker that accepts currency deposits?

Thanks
 
Are UK Investment Trusts an alternative here? Are there Investment Trusts that passively mimic indexes and reinvest dividend income? Most Investment Trusts seem to distribute dividends.
 
UK investment trusts are certainly an alternative if you are looking for a diversified equity investment that is subject to the income tax/CGT regime with no US withholding or estate tax complications. However, all mainstream UK ITs are actively managed, distributing vehicles - they are not accumulating index funds.

I think ITs are a particularly good option for an investor with a low marginal tax rate that is looking for a relatively reliable income stream, with the potential for long-term income and capital growth.
 
Sarenco said:
UK investment trusts are certainly an alternative if you are looking for a diversified equity investment that is subject to the income tax/CGT regime with no US withholding or estate tax complications. However, all mainstream UK ITs are actively managed, distributing vehicles - they are not accumulating index funds.

I think ITs are a particularly good option for an investor with a low marginal tax rate that is looking for a relatively reliable income stream, with the potential for long-term income and capital growth.
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One of them trusts you mentioned Foreign and Colonial paid me a dividend recently , I choose to take it in shares as that was an option , so its kinda the same as accumulating , I don't know if all the trusts do that , that is my first dividend from the investment trusts.
 
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