Which ETFs are deemed disposal after 8 years?

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gonesp

Registered User
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Hi there,

I've tried searching the forum for an answer to this, also been looking into revenue, but can't find anything.

I know that ETF taxes are deemed to paid every 8 years or on disposal, but does this apply to any ETF regardless if its domicile? Or are certain ETFs that don't get affected by this rule?

Thanks!
 
The fact that the PRIIPS regulation makes it difficult for retail investors to access non-EU domiciled ETFs doesn’t change the tax analysis.
 
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As alluded to above, it is possible as an Irish investor to trade in US-listed ETFs for example, but there are a number of conditions to meet which makes access to these securities for the few and not the many.

MiFID (Markets in Financial Instruments Directive) does allow for re-categorisation of a Retail Client to an Elective Professional Client providing they satisfy at least two of the following criteria:

1. Over the last four quarters, the Client conducted trades in financial instruments in significant size at an average frequency of ten per quarter;

2. The Client holds a portfolio of financial instruments (including cash) that exceeds EUR 500,000 (or equivalent);

3. The Client is an individual accountholder or a trader of an organisation account who works or has worked in the financial sector for at least one year in a professional position which requires knowledge of products it trades in.

Given that there are investors out there that satisfy this criteria, tax guidelines have to exist for these securities.
 
There are also plenty of retail investors in Ireland that would have acquired shares in non-EU domiciled funds prior to the introduction of the PRIIPs regime.
 
Sarenco said:
The fact that the PRIIPS regulation makes it difficult for retail investors to access non-EU domiciled ETFs doesn’t change the tax analysis.
Click to expand...

If I am registered in a broker in the US, would it be illegal for me to invest in a non-EU domiciled ETF?
 
gonesp said:
If I am registered in a broker in the US, would it be illegal for me to invest in a non-EU domiciled ETF?
Click to expand...

No

The PRIIPS legislation that has come in really puts the onus on the provider/ advisor to provide the investor with a Key Investor Information Document. Obviously, non domiciled ETFs don't comply with laws in other jurisdictions, so they don't produce EU standard KIIDs. As these can't be provided, they have been removed from online trading platforms. They are still there, just not available for easy access to the retail investor.


Steven
www.bluewaterfp.ie
 
SBarrett said:
No

The PRIIPS legislation that has come in really puts the onus on the provider/ advisor to provide the investor with a Key Investor Information Document. Obviously, non domiciled ETFs don't comply with laws in other jurisdictions, so they don't produce EU standard KIIDs. As these can't be provided, they have been removed from online trading platforms. They are still there, just not available for easy access to the retail investor.


Steven
www.bluewaterfp.ie
Click to expand...

Sure, but if platforms like Firstrade are apparently allowing EU based accounts to access US domiciled ETFs, then it wouldn't be illegal using them for that intent?
 
gonesp said:
Sure, but if platforms like Firstrade are apparently allowing EU based accounts to access US domiciled ETFs, then it wouldn't be illegal using them for that intent?
Click to expand...
No.

There is nothing illegal about a retail investor in the EU buying shares in a US domiciled ETF.
 
gonesp said:
Sure, but if platforms like Firstrade are apparently allowing EU based accounts to access US domiciled ETFs, then it wouldn't be illegal using them for that intent?
Click to expand...

Firstrade are not in the EU so they are not obligated to provide documentation for another jurisdiction.

And you will find that any Europeans with US accounts have either set them up years ago or have lied about their residential address as you now have to be a US resident with a US address to open a trading account with a US platform/ broker.


Steven
www.bluewaterfp.ie
 
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