UK based ETP that track US shares

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BlueHorseShoe

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What are the Irish tax residence implications of investing in UK based ETPs like NVD3 which can be listed in dollars (or pounds)

Trading 212 markets Cyprus offers Irish residents the opportunity to buy many 3x leverage ETPs

Are these usually just treated as CGT on gains?
 
Leveraged ETPs are CGT because they are debt securities, not funds. You can check the structure in its Fact Sheet or KID.


While an investment in an Exchange Traded Fund (ETF) would generally represent a material interest in an offshore fund, investments in Exchange Traded Commodities (ETC) can vary and may be a debt security. If an ETC is a debt security, then it will be taxed in accordance with general taxation principles. A review of the exchange traded product is important to ascertain what tax treatment applies.
 
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ETP stands for “Exchange Traded Product” and is the collective term for ETFs, ETCs and ETNs.

I’ve never heard of NVD3 and would suggest proceeding with an abundance of caution.
 
Corola said:
Leveraged ETPs are CGT because they are debt securities, not funds. You can check the structure in its Fact Sheet or KID.


While an investment in an Exchange Traded Fund (ETF) would generally represent a material interest in an offshore fund, investments in Exchange Traded Commodities (ETC) can vary and may be a debt security. If an ETC is a debt security, then it will be taxed in accordance with general taxation principles. A review of the exchange traded product is important to ascertain what tax treatment applies.
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Hi Corola
Do you know how Irish Revenue might treat Income Shares offered by Leverage Shares plc - these seem to be very complex instruments and there is a fee of around 0.55% so possibly debt leveraged
Thanks
 
The main distinction is whether you own a share of the underlying assets or if you are only owed the return on the underlying assets. With a fund you're buying an asset, with debt you're buying a promise.

You'll have to read its prospectus to find out what way it is structured, looking for the words "debt security" or "debt instrument".
 
Hold the phone, does this mean that most leveraged ETF's will qualify for CGT treatment?

For example the AMUNDI ETF LEVERAGED MSCI USADAILY UCITS ETF
From the Fund literature.
"1. Strategy employed:
The Fund is managed using a technique known as “index-tracking”, the objective of which is to replicate
changes in the performance of the MSCI USA Leveraged 2x Daily Strategy Index using a swap-based
replication method.
To maintain the closest possible correlation with the performance of the MSCI USA Leveraged 2x Daily
Strategy Index, the Fund will buy a diversified portfolio of stocks (the “Portfolio”) and an over-the-counter (OTC)
total return swap, a financial derivative instrument which turns the exposure to the securities in the Portfolio
into exposure to the MSCI USA Leveraged 2x Daily Strategy Index. "
 
AJAM said:
Hold the phone, does this mean that most leveraged ETF's will qualify for CGT treatment?

For example the AMUNDI ETF LEVERAGED MSCI USADAILY UCITS ETF
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That is a UCITS ETF so it is actually a fund. It doesn't mention debt in its factsheet.

When it's not UCITS then it may or may not be a fund. These are complex products and should be looked at on a case-by-case basis.
 
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Corola said:
The main distinction is whether you own a share of the underlying assets or if you are only owed the return on the underlying assets. With a fund you're buying an asset, with debt you're buying a promise.

You'll have to read its prospectus to find out what way it is structured, looking for the words "debt security" or "debt instrument".
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Once again thanks for the quick and knowledgeable response

The blurb of the one I am most interested in says

"The IncomeShares Nasdaq 100 Options (0DTE) ETP seeks to generate monthly income by selling 'Zero Days to Expiration' (0DTE) put options on the Nasdaq 100 Index daily and paying a return on the premia collected. The ETP aims to realise the higher-income potential from the rapid time decay of these options and offer indirect, upside exposure to the Index up to the options' strike price."

Seems like they are selling derivatives to make monthly gains and you do not own the company shares (but the option based incomeshares have a value) - also the costs are around 0.7% - I read somewhere its 91 cents per share for recent payouts but can be higher - literally aiming to just make a grand a year from these incomeshares

Not all incomeshares are managed the same way but this one of interest is as mentioned above

EDIT: Should also mention there is a value for the incomeshare itself and there is a monthly payout from derivative trading - so 2 possible sources of taxation - actually income tax for the payout would be more beneficial than CGT but in this scenario I am aiming for under the CGT threshold so CGT would be the better of the 2
 
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BlueHorseShoe said:
"The IncomeShares Nasdaq 100 Options (0DTE) ETP seeks to generate monthly income by selling 'Zero Days to Expiration' (0DTE) put options on the Nasdaq 100 Index daily and paying a return on the premia collected. The ETP aims to realise the higher-income potential from the rapid time decay of these options and offer indirect, upside exposure to the Index up to the options' strike price."
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The KID also says "You are about to purchase a product that is not simple and may be difficult to understand."

And... it's right.
 
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Corola said:
The KID also says "You are about to purchase a product that is not simple and may be difficult to understand."

And... it's right.
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Amen to that

I guess the monthly returns from income shares could literally fall under income or CGT or even DIRT

Selling leverage shares themselves is probably is CGT but actually selling in the lower trading volume leverage shares is a bit of a waiting game sometimes - price can be brilliant but no buyers

I was just hoping they would do the derivative legwork so I don’t have to
 
There is also a 3x leveraged S&P 500 ETN
3USL WisdomTree S&P 500 3x Daily Leveraged
"This ETP is structured as a debt security and not as shares (equity) and can be created and redeemed on demand by authorised participants and traded on exchange just like shares in a company. This ETP is not a UCITS product."
 
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