Yes. Investing and dealing with local and US income and estate taxes is such a mess. As a US citizen living abroad I can assure you and your viewers that my investment and tax problems are far, far worse. Fortunately as a resident of Switzerland, I have been slowly able to work out a do-able investment strategy.
US ETFs are the best option in Switzerland. 1) No tax-benefits with accumulating ETFs here. 2) You can get back half of the 30% dividend taxes. 3) Estate tax agreement yes 4) If I move somewhere else, easy, I will sell those US-ETFs and buy the Irish ones, no capital gain taxes due here, we just pay for the dividends. So yes, every country different.
Romania has a preferential agreement with US for avoiding double taxing, thus leaving the tax at 10%, which is better than Germany which has a 30% tax on dividends and profit.
Not worth trying US based ETFs, distributed dividends are headache for accountants and laws in some countries are very complicated. You end up paying more in withholding tax than you save on TER. Thanks we have you Angelo.
UK has a treaty with the US that voids the estate tax, we also have a div deal that they only tax 15% div tax and we also have a tax free ISA account so if you are in the UK do invest in U.S Stocks
Thanks for pointing this out! I had to double-check that the invesco and vanguard world ETFs that my wife and i have on trade republic are indeed not US ETFs.. Tips for anyone who also got confused: - the "UCITS" in the name is a key indicator that the ETF is domiciled in Europe and complies with European Union regulations. -Use the ISIN (International Securities Identification Number) instead of the name to ensure you find the correct ETF. European-domiciled Vanguard and Invesco ETFs will have ISINs starting with: IE for Ireland LU for Luxembourg -Check the Key Information Document (KID): When viewing an ETF in Trade Republic, check its KID (Key Information Document) or prospectus. It will state where the ETF is domiciled.
Thanks Angelo, I am living in Europe and wanted to invest in ETF's for a long time and I was doing a lot of research before I invested and your videos were really helpful
To avoid estate tax, you can open joint account in IBKR with your spouse. So incase one of them passed away, the other still can access and cash in or continuing the investment, ofc I am talking about individual stock in US(or all around the world).
Not true, your spouse will need to prove % of holdings she funded in order to avoid it. For example if your wife doesn't work she will pay estate tax no matter what on full amount
This video is the most comprehensive video for Non Resident US investors leaving no grey area on Estate tax and explaining the matter with examples. I video to be saved and watched every now and then.
I am a Dutch citizen and I was rather interested in buying SCHD. After watching this video however, I am conflicted. My country (Netherlands) does in fact have a treaty with the US, but I am still hesitant to pull the trigger on SCHD if that means having to deal with the various obstacles listed in this video. Would you recommend still pulling through or should I stick to the Ireland-based ones instead?
Hello, I'm just starting investing, I live in Europe as well. I don't understand where I can check if the ETF is domiciled in Europe or the US. When I check FTSE ETFs there are so many of them and almost all are domiciled in Irland, so i don't get which are the US stocks then?
Thx! I live in Belgium and was not aware of the estate tax. This is an eyeopener and will definitely change my investment behavior. I will simplify even more and stick more to ETF's, dividend paying for growing income and accumulating for the long term part.
A resident of Poland here (with Indian citizenship), I have been adding SPY5 and iShares IT ETFs over the past year. The iShares IT ETF doesn't distribute dividends, but SPY5 does, and now I realize why SPY5 could be problematic for me in long run I wont deny it I do get happy when I received my little dividend payout, and even though Both are domiciled in Ireland, but the iShares ETF is accumulating, whereas SPY5 is distributing, and I see how this might cause issues in terms of tax wise. I initially thought I only had to declare dividends from my Indian stocks in polish tax forms, which I bought through an India-based broker, and a few through Interactive Brokers. Thanks for the well-thought-out video. There is very little information available in English on this topic.
Hi Angelo, this topic is super important. Thanks for addressing it. Could you cite the sources you used for your research? I was aware of this law, but for those of us living in Italy, I didn't know how applicable it was. For those who engage in stock picking, it’s easy to exceed the threshold, and the consequences can be disastrous. I know there’s a way to protect oneself through Trusts, but even on this topic, the information is scarce, especially regarding costs and intergenerational transfers. In my opinion, there is very little information about this regulation among investors, and it deserves to be explored further. Thanks.
Wow, good insight, Angelo. Never thought of it from this perspective. I always assumed that since there is no income in the US, you just pay the taxes in your home country. Important topic, thanks for sharing!
Very very interesting. So what are some solutions if we have ETF or stocks in the US, that we are currently in a country with favorable US estate laws? Should we start bringing the assets back into Europe before death?
Is there any difference between buying US stocks on a US exchange vs European exchange? For example, if I want to buy McDonald's stock and buy it as MDO listed in Germany, instead of MCD listed in the US?
Hi Angelo. I usually follow you from Portugal. I have been investing in the VWCE ETF but now I was thinking about investing some money in individual US stocks until I saw this video... I didn't quite understand, but as a European, shouldn't I buy American stocks? Help me clarify.
Hello, Angelo. If I have 200k in US individual stocks and I pass away how will the US IRS know? If I leave the account details with family members and they sell the shares and withdraw the funds? Would anything happen?
@@FxAndrej When I say account details I am including email and phone access. When we have large amounts invested we need a trusted person in case something happens.
You would be commiting a fraud both in USA and in your own country. Good luck explaining to your police how your dead relative sold stocks and gave the money to you.
I'm surprised so many EU countries don't have the estate and gift tax treaty with the US - what happened to the benefits of being in the EU? In the UK we can invest (as an example) in US REITs in a SIPP and pay no w/h tax, no income tax and no CGT and the REITs as tax free at source so effectively they are completely tax free. You can avoid the ETF high fees by doing some homework and investing directly in the companies. I would only but individual stocks not ETFs and therefore save a fortune when compounded
Austria has a Treaty, but this includes only income and corporate tax. Seems to depend on where you buy your US-stocks: NYSE and Nasdaq have the clearinghouse (where they are noted) in the US and US-clearinghouses seem to have to inform IRS (US-tax-office), after the securities-account/Wertpapierdepot has been overwritten to the heirs. But EU has FATCA, so international operating banks seem to have to inform IRS anyway. Maybe there is a difference between 'registered shares/Namensaktien' and 'bearer shares/Inhaberaktien'. So confusing... Lucky, when you are German or from Switzerland. But anyway, I'm way below the limit, so anything good with me. But on the longterm very valueable information to prefer ETFs, thanks :)
Another note, with regards to the US Estate tax, will the same apply if the broker account and assets are held in a joint account ( assuming only one will pass away ) ?
100% yes. You will need to report this information to your broker first (you will need to switch to individual account) and then pay estate tax based on !contribution %! It's really hard process where you will need to prove contribution level to your investments. If this can't be determined using transactional data to/from brokerage account you will probably need show your tax declaration to determine this percentage. At the end of the day it's a lengthy and very troublesome process. Consider do your investments via trust or some sort of LLC from your home country - this is the best way to avoid hassle.
Angelo , i have a question For European resident ,if he buys and holds US Stock with the European broker, the estate tax would still be applicable ?? Or is it only in the case when the same european investor buys and holds the US stock with american broker such as schwab. Though its quite evident but would appreciate if you can give clarity on this.
@@AngeloColomboFi Do you know people who paid this tax? Or maybe you know the statistics of how many people paid this tax in the world? It seems to me that paying this tax is very unlikely if we invest through an EU brokerage account, of course possibility exists no one knows the future.
You can't buy as a person shares on the Deutsche Boerse. You need to buy it with the help of your broker (Bank). You need a depot in the bank, and the bank knows your citizenship and residency. If you have your permanent residency in Germany, then it's going to be a different story.
@@sunflower9115 I mean using Trading 212 of course, but the point is that there is KO stock and CCC3 stock and I wanted to know the difference when it comes to inheritance tax
@angelo I assume that etf management firms pay a withholding tax when receiving a dividend? So, for example, if I have vwce accumulating has Vanguard already paid 15% before reinvesting dividends? Thanks!!?
Yes, the 15% US dividend withholding tax is already accounted for when dividends are reinvested in Acc. Vanguard ETFs or when they're paid out in Dis. Vanguard ETFs (or other Ireland-domiciled ETFs for that matter)
In Sweden, 15% tax is withheld for dividends from US companies. Some online brokerage accounts will pay that back 100% after a year, if the stocks are held in the correct investment account type
I don't think so. I was also curious about that and decided to check with our good friend ChatGPT. Keep in mind that I asked the question in relation to my Bulgarian citizenship but I think this is valid for other countries as well: Tax Implications for Foreign Investors • U.S. Taxes: If you purchase U.S. stocks through a European exchange, you may still be subject to U.S. tax laws on dividends and capital gains: • Dividends: Generally, U.S. withholding tax applies to dividends paid to foreign investors, typically at a rate of 30%. However, this rate can be reduced under the U.S.-Bulgaria tax treaty to 15% for qualified dividends, provided you submit the appropriate forms (like W-8BEN) to your brokerage. • Capital Gains: As a non-resident alien, you typically will not be subject to U.S. capital gains tax on the sale of U.S. stocks, as long as those gains are not effectively connected to a U.S. trade or business.
Holy flying **ck! Well, this is an eye opener. Thank you very much and greetings from Czech Republic. I will keep my US stocks for now, but I will definitely move out of the positions eventually. We pay no capital gains tax after holding an asset for 3 years
Yes, "luckily" very few will be able to buy US ETFs in the first place, unless you go out of your way to find a US broker that still takes EU clients. If you're using Interactive Brokers Ireland, Trade Republic, Degiro etc. you won't be able to buy US-domiciled ETFs anyway
It still matters if the ETF is physically holding US stocks (so not SWAP-based), since the ETF itself already has to pay those taxes when dividends are paid by US stocks - it has nothing to do with the broker
@@AngeloColomboFi thanks for the response, but so that it is entirely clear to me, we talk about withholding tax right? If that is the case, depending on tax treaties between the countries, you may still be able to settle the withholding tax of a Lux-domiciled ETF with your country' tax office, right?
Great video. Thank you for the warning, Angelo. One question. During your research, have you come across a comprehensive definition of "assets situated in the US"? Obviously, buying KO at NYSE is such an asset, but what about e.g. AAPL at XETRA or BNS (canadian bank) at NYSE? Or ADRs? In short, what is the criterion - the exchange, the ISIN, or just of these is sufficient for the asset to qualify as US-based?
Great video Angelo! An Spaniard here. How does this apply to countries with double taxation treaty with USA like Spain? I believe you declare capital gains in Spain and can offset any type of taxes applied from USA
So which brokers allow EU investors. I've got a US bank account because I work in the US. So wiring money is no issue, I'd like to hold US ETF since with a good strategy you could get above 20% CAGR.
Interactive Brokers and Trade Republic (both linked in the description) are the two brokers I use & recommend the most, due to their low fees and what they each offer. Both of them are available to Greek investors :)
I think you're correct - as far as I'm aware, there is no estate tax on US bonds. And since you mentioned ETFs, there is no estate tax on any UCITS ETF (so basically any ETF we're able to buy via Interactive Brokers Ireland or Trade Republic for example).
Of course you can - just be aware that if you hold more than >$60K of US stocks and if you're in a country without a US estate tax treaty, your heirs may lose a large portion of your stocks value to US taxes
Gem of a channel! Finally got the time to write up and take notes of your videos. One question, when investing on IBKR, your limit section automatically fills in and mine doesn't - how did you enable this? I just switched to tiered pricing
Yup, any UCITS ETF (like VUSA) is perfectly fine. It's pretty much impossible to buy US ETFs anyway on regulated brokers like IBKR or Trade Republic anyway due to EU regulations
So, based on that VUSA and VUAA which are UCITS and also Ireland domiciled are good options? If yes, what about this ridiculous EU rule for brokers to offer the relevant info in the local language of the investor? To this day, DEGIRO and Interactive Brokers do not allow us to buy VUSA/VUAA. Any ideas how to overcome this? The EU makes the lives of young investors difficult in general. They don't even raise the guarantee limit from the laughable 20.000 euros compared to the 500.000 USD that exists in the US.
Yes, those or any other UCITS ETF is not a problem. What country are you based in? What error message do you get on Interactive Brokers when you want to buy VUSA? I'm asking since I assumed there were no such issues for investors from all over Europe on IBKR. And yes, I also don't like that investor compensation is so ridiculously low in Europe, I talked about it here: th-cam.com/video/U47v1DkQRQk/w-d-xo.html While it should never be needed (only in case of fraud), it would still let every EU investor sleep better at night.
@@AngeloColomboFi Greece. DEGIRO doesn’t allow us to buy VUSA or any other ETF, for Interactive Brokers I haven’t tried it, but I know it doesn’t work either.
I just checked the Greek Trade Republic asset page and both VUAA and VUSA are definitely tradable there: angelo.fi/trep Could be an alternative to look at :)
Hi! Very useful video, thank you very much. How about reverse situation, I am currently resident of Greece but plan to move to the US in 5-10 years. If I have Europe base ETF, will there be tax implications in the US? 🤔
My pleasure! Not sure about that, I think you would probably need to figure out how to tax reinvested dividends every year though if it's an Accumulating UCITS ETF. Wait a second, now I'm remembering you have no tax on UCITS ETFs in Greece - in that case, just selling your shares tax free when you leave and buying an ETF locally is likely the best/easiest solution
The $60K tax-free allowance is for the total amount of US-based assets (eg. US single stocks) you hold and only becomes relevant if you were to pass away and if your country of residence doesn't have an estate tax treaty with the US. It's just something to be aware of when making investment decisions while keeping whoever may inherit them one day in mind.
It was just an example, because you like interactive brokers so much😊 and it is on the rise… So this implies only in cases of inheritance not when selling?
Hi Angelo I have FTSE All-World USD (ACC) from Vanguard and MSCI ACWI IMI (ACC) from SPDR. Are these two European base ETF? If not what can I do now and with which ETF can I replace them? Thanks for your informative content ✌️
Yes of course, there's nothing to worry about! You can always check justetf.com (or the details in your brokerage account) if you're not sure about any of your ETFs. But buying US ETFs is extremely difficult as a European investor anyway
Easy check - take ticker symbol or ISIN number and look for whole name of the fund - if there is UCITS in the name, then yes, they are EU based. BTW - USA versions are never ACC
If that's an area you like investing in, I'm certainly not the one to try and stop you :) Just keep the US estate tax in mind further down the line, in case your country doesn't have a treaty with the US and you want to be able to pass on as much as possible to your inheritors one day
I wasn't aware of this. I quite like the VUSA ETF, which is mainly American stocks obviously. It is based in Ireland though. What does that mean? Most high performing ETFs will have US stocks in them. It's hard to avoid.
Hi Angelo. Thanks for your very helpful videos! I will very soon start investing and watching your contents helped me a lot to have a better idea of the investment world. I have a question for you though: I am based in Sweden, so my salary is paid in Swedish Kronor, which are very weak lately. Do you think I should still buy ETFs in euros or there are better options for me? My time horizon is at least 15/20 years. Thanks
Depending on the size of your portfolio, it's probably not too hard for your heirs to withdraw your US assets before they are frozen, in order to avoid any estate tax. Though you'd probably not want to go vacationing there in the future, or buying more US assets...
Hmmm, not sure about that. Never heard about funds bought in another country would pay IHT. I’m in the U.K. and have VUSA etc, I don’t expect inheritors to pay any tax to the U.S. regardless of value. They will to the U.K. unless it’s in a pension
VUSA is domiciled in Europe (Ireland) anyway, so that would not be counted for US estate taxes. And the UK has an estate tax treaty with the US - still, that does not mean you would not need to pay taxes to the US if you own more than a certain amount of US stocks or other US-domiciled assets, no matter where they were purchased: brodies.com/insights/wills-and-estate-planning/the-interaction-between-uk-and-us-taxes-on-death/
Thanks so much for this video, I had no clue. Living in Switzerland and mostly buying US-ETFs. It seems we do have an estate tax agreement with the US, but I had no idea about the formalities to be addressed within the 9-month deadline.
If you look at total return europe is With 6% less then US stockmarket everage. Especially in tech sector US 28% return europe around 7% in tech. Your gains in US tech is 4 times of eu.
Likely the best (due to lowest cost) S&P 500 ETF that's currently available! I personally prefer investing globally compared to just the US, but that's for you to decide :)
@@AngeloColomboFi thank you for the response. Would you still recommend FWRA over VWCE? My time horizon is 25 years and so I still believe S&P will hold out.
Switzerland has an estate tax treaty, so it's not as much of an issue for you, unless you ever decide to move to another country. But since you have no capital gains taxes, you could just sell at that point and switch to UCITS ETFs for example
I am tax resident in Ireland so Irish tax law means I have to pay 41% tax on all capital gains on offshore funds (not shares) and 41% on all unrealised gains on funds after 8 years, so if you were short of cash you could have to sell shares to pay the tax. And all Irish investments are subject to 25% DWT, so my tax advisor told me not to invest in any Irish investment or any offshore investment fund. I can only invest in UK investment trusts/companies and USA ETFs which are deemed as shares not funds. As far as USA estate tax is concerned make sure that all your investment accounts are in yours and your wife's name, and once the surviving partner looks less likely to last much longer sell up and move the funds back to your native country.
Yeah, the 41% tax on unrealized ETF gains in Ireland every 8 years is ridiculous, I really hope that is changed soon... Since you have an estate tax treaty in Ireland, US ETFs may indeed be attractive as an alternative if you have access to them, as long as you don't move somewhere else
Were you aware of US estate taxes?
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Yes. Investing and dealing with local and US income and estate taxes is such a mess. As a US citizen living abroad I can assure you and your viewers that my investment and tax problems are far, far worse. Fortunately as a resident of Switzerland, I have been slowly able to work out a do-able investment strategy.
US ETFs are the best option in Switzerland. 1) No tax-benefits with accumulating ETFs here. 2) You can get back half of the 30% dividend taxes. 3) Estate tax agreement yes 4) If I move somewhere else, easy, I will sell those US-ETFs and buy the Irish ones, no capital gain taxes due here, we just pay for the dividends. So yes, every country different.
100% agree 😘
VT and chill ❤
Romania has a preferential agreement with US for avoiding double taxing, thus leaving the tax at 10%, which is better than Germany which has a 30% tax on dividends and profit.
You can even get the entire 30% of the withholding tax if your broker is a qualified intermediary
As an American living in Switzerland, especially with our wonderful IRS rules on foreign funds, I can only agree ;)
WOW. Such an important topic that i never heard about before. Thanks for sharing!
This is one of the most important videos that I have ever seen. Thanks a lot for sharing this important info
Not worth trying US based ETFs, distributed dividends are headache for accountants and laws in some countries are very complicated. You end up paying more in withholding tax than you save on TER. Thanks we have you Angelo.
UK has a treaty with the US that voids the estate tax, we also have a div deal that they only tax 15% div tax and we also have a tax free ISA account so if you are in the UK do invest in U.S Stocks
So no tax at all for us funds that are in a isa?
@@edzgt5243 yes
@@edzgt5243nope, ISA’s are tax wrappers and presumably the money going into the ISA is already income post income tax.
Good info! I am from the Netherlands so I am fine, but good to know that when I want to move to another country this is something to keep in mind.
You're fine until box 3 comes to visit you
Thanks for pointing this out!
I had to double-check that the invesco and vanguard world ETFs that my wife and i have on trade republic are indeed not US ETFs..
Tips for anyone who also got confused:
- the "UCITS" in the name is a key indicator that the ETF is domiciled in Europe and complies with European Union regulations.
-Use the ISIN (International Securities Identification Number) instead of the name to ensure you find the correct ETF.
European-domiciled Vanguard and Invesco ETFs will have ISINs starting with:
IE for Ireland
LU for Luxembourg
-Check the Key Information Document (KID):
When viewing an ETF in Trade Republic, check its KID (Key Information Document) or prospectus. It will state where the ETF is domiciled.
Thank you, Angelo, you are a rare person to listen to considering the stock market issues.
Thanks Angelo, I am living in Europe and wanted to invest in ETF's for a long time and I was doing a lot of research before I invested and your videos were really helpful
To avoid estate tax, you can open joint account in IBKR with your spouse. So incase one of them passed away, the other still can access and cash in or continuing the investment, ofc I am talking about individual stock in US(or all around the world).
Okay, let me first find a spouse then 😂
Not true, your spouse will need to prove % of holdings she funded in order to avoid it. For example if your wife doesn't work she will pay estate tax no matter what on full amount
This video is the most comprehensive video for Non Resident US investors leaving no grey area on Estate tax and explaining the matter with examples. I video to be saved and watched every now and then.
I am a Dutch citizen and I was rather interested in buying SCHD. After watching this video however, I am conflicted. My country (Netherlands) does in fact have a treaty with the US, but I am still hesitant to pull the trigger on SCHD if that means having to deal with the various obstacles listed in this video. Would you recommend still pulling through or should I stick to the Ireland-based ones instead?
Hello, I'm just starting investing, I live in Europe as well. I don't understand where I can check if the ETF is domiciled in Europe or the US. When I check FTSE ETFs there are so many of them and almost all are domiciled in Irland, so i don't get which are the US stocks then?
Would love to see a video you discussing your thesis for btc and eth. Keep up the good work Angelo!
Thx! I live in Belgium and was not aware of the estate tax. This is an eyeopener and will definitely change my investment behavior. I will simplify even more and stick more to ETF's, dividend paying for growing income and accumulating for the long term part.
Another Great Video Angelo!! Greetings from Greece!
A resident of Poland here (with Indian citizenship), I have been adding SPY5 and iShares IT ETFs over the past year. The iShares IT ETF doesn't distribute dividends, but SPY5 does, and now I realize why SPY5 could be problematic for me in long run I wont deny it I do get happy when I received my little dividend payout, and even though Both are domiciled in Ireland, but the iShares ETF is accumulating, whereas SPY5 is distributing, and I see how this might cause issues in terms of tax wise.
I initially thought I only had to declare dividends from my Indian stocks in polish tax forms, which I bought through an India-based broker, and a few through Interactive Brokers.
Thanks for the well-thought-out video. There is very little information available in English on this topic.
Hi Angelo, this topic is super important. Thanks for addressing it. Could you cite the sources you used for your research? I was aware of this law, but for those of us living in Italy, I didn't know how applicable it was. For those who engage in stock picking, it’s easy to exceed the threshold, and the consequences can be disastrous. I know there’s a way to protect oneself through Trusts, but even on this topic, the information is scarce, especially regarding costs and intergenerational transfers. In my opinion, there is very little information about this regulation among investors, and it deserves to be explored further. Thanks.
can you please talk about revolut!? Thanks in advance! Love your channel . Learnt a lot.
Wow, good insight, Angelo. Never thought of it from this perspective. I always assumed that since there is no income in the US, you just pay the taxes in your home country.
Important topic, thanks for sharing!
Thanks a lot! I was not aware of this important nuance. That's truly an important video.
This is a really important video, well done Angelo!
Great video, Angelo. On a subject that few people were aware.
Such a large percentage of Portuguese watching your channel ❤ 🇵🇹!
No wonder! your channel is brilliant... And we are very smart 🤓😂😂 😘
Also very poor, sadly xD
@@Kurotsukuyomi you hit where it hurts (cry in poor)
also, we are not very smart in general
@@joaomachado3715 finally a true portuguese ahaha
Thank you!
I did not realize this and it’s is applicable to me.
You always provide such great information. Thanks :)
Very very interesting. So what are some solutions if we have ETF or stocks in the US, that we are currently in a country with favorable US estate laws? Should we start bringing the assets back into Europe before death?
Is there any difference between buying US stocks on a US exchange vs European exchange? For example, if I want to buy McDonald's stock and buy it as MDO listed in Germany, instead of MCD listed in the US?
No, it will be an american stock (US domiciled asset) either way
@@AngeloColomboFi Thank you
Hi Angelo. I usually follow you from Portugal. I have been investing in the VWCE ETF but now I was thinking about investing some money in individual US stocks until I saw this video... I didn't quite understand, but as a European, shouldn't I buy American stocks? Help me clarify.
Hello, Angelo. If I have 200k in US individual stocks and I pass away how will the US IRS know? If I leave the account details with family members and they sell the shares and withdraw the funds? Would anything happen?
Exactly what I was thinking.
I was thinking the same. One issue is that most accounts have 2FA authentication, so just logging in for another person can be a challenge
@@FxAndrej When I say account details I am including email and phone access. When we have large amounts invested we need a trusted person in case something happens.
You would be commiting a fraud both in USA and in your own country. Good luck explaining to your police how your dead relative sold stocks and gave the money to you.
You can invest in an Armundi Prime Global and you pay 0,05% ter so no Argument for me
I'm surprised so many EU countries don't have the estate and gift tax treaty with the US - what happened to the benefits of being in the EU? In the UK we can invest (as an example) in US REITs in a SIPP and pay no w/h tax, no income tax and no CGT and the REITs as tax free at source so effectively they are completely tax free. You can avoid the ETF high fees by doing some homework and investing directly in the companies. I would only but individual stocks not ETFs and therefore save a fortune when compounded
Do synthetic ETFs avoid all these problems??
How to figure out if the ETF is Ireland based? I can usually only see in which stock market it is negotiated. Is this info in the KID?
Also, thanks a lot for this very comprehensive video. Regards!
So if I have several stocks each worth less than 60k but in total they're worth more, I'll still have to pay 40%?
Yes, sadly the total is relevant, no matter if it's spread over several stocks or even several brokers.
@@AngeloColomboFi well that's a problem
ok, if you don't pass away, but just sell your us stocks with profit, will you be obliged to pay estate tax?
what do you think of Trade Republic for a long term investing? worth it? ibkr its so difficult to navigate. Which one would you choose?
Austria has a Treaty, but this includes only income and corporate tax. Seems to depend on where you buy your US-stocks: NYSE and Nasdaq have the clearinghouse (where they are noted) in the US and US-clearinghouses seem to have to inform IRS (US-tax-office), after the securities-account/Wertpapierdepot has been overwritten to the heirs. But EU has FATCA, so international operating banks seem to have to inform IRS anyway. Maybe there is a difference between 'registered shares/Namensaktien' and 'bearer shares/Inhaberaktien'. So confusing... Lucky, when you are German or from Switzerland. But anyway, I'm way below the limit, so anything good with me. But on the longterm very valueable information to prefer ETFs, thanks :)
Another note, with regards to the US Estate tax, will the same apply if the broker account and assets are held in a joint account ( assuming only one will pass away ) ?
Good question! I'm also curious about that.
100% yes. You will need to report this information to your broker first (you will need to switch to individual account) and then pay estate tax based on !contribution %! It's really hard process where you will need to prove contribution level to your investments. If this can't be determined using transactional data to/from brokerage account you will probably need show your tax declaration to determine this percentage. At the end of the day it's a lengthy and very troublesome process. Consider do your investments via trust or some sort of LLC from your home country - this is the best way to avoid hassle.
Angelo , i have a question
For European resident ,if he buys and holds US Stock with the European broker, the estate tax would still be applicable ?? Or is it only in the case when the same european investor buys and holds the US stock with american broker such as schwab.
Though its quite evident but would appreciate if you can give clarity on this.
Sadly it doesn't matter where the broker is located, single US stocks are still counted as US-domiciled assets
@@AngeloColomboFi Do you know people who paid this tax?
Or maybe you know the statistics of how many people paid this tax in the world? It seems to me that paying this tax is very unlikely if we invest through an EU brokerage account, of course possibility exists no one knows the future.
@@AngeloColomboFi european brokers like degiro dont comment this rule
You can just change your portfolio at the moment you move to a non tax treaty country?
Yes, just keep in mind that also may have some tax implications due to realizing capital gains
What if as a Czech citizen I buy Coca-Cola CCC3 stock on Deutsche Burse instead of KO on NYSE? Will there still be so high inherritance tax?
You can't buy as a person shares on the Deutsche Boerse. You need to buy it with the help of your broker (Bank). You need a depot in the bank, and the bank knows your citizenship and residency. If you have your permanent residency in Germany, then it's going to be a different story.
@@sunflower9115 I mean using Trading 212 of course, but the point is that there is KO stock and CCC3 stock and I wanted to know the difference when it comes to inheritance tax
@angelo I assume that etf management firms pay a withholding tax when receiving a dividend? So, for example, if I have vwce accumulating has Vanguard already paid 15% before reinvesting dividends? Thanks!!?
Yes, the 15% US dividend withholding tax is already accounted for when dividends are reinvested in Acc. Vanguard ETFs or when they're paid out in Dis. Vanguard ETFs (or other Ireland-domiciled ETFs for that matter)
@@AngeloColomboFi OK thank you!
Great video. Thank you for the tip.
So, I am a hungarian citizen living in the UK, Vanguard S&P 500 VUAG is safe?
This is awesome and priceless information Angelo, thanks once again!
In Sweden, 15% tax is withheld for dividends from US companies. Some online brokerage accounts will pay that back 100% after a year, if the stocks are held in the correct investment account type
This is not at all the same type of tax discussed in the video.
Angelo: when i own $TSLA i am subjtected to this tax, but when owning $TL0 i am good?
I don't think so. I was also curious about that and decided to check with our good friend ChatGPT. Keep in mind that I asked the question in relation to my Bulgarian citizenship but I think this is valid for other countries as well:
Tax Implications for Foreign Investors
• U.S. Taxes: If you purchase U.S. stocks through a European exchange, you may still be subject to U.S. tax laws on dividends and capital gains:
• Dividends: Generally, U.S. withholding tax applies to dividends paid to foreign investors, typically at a rate of 30%. However, this rate can be reduced under the U.S.-Bulgaria tax treaty to 15% for qualified dividends, provided you submit the appropriate forms (like W-8BEN) to your brokerage.
• Capital Gains: As a non-resident alien, you typically will not be subject to U.S. capital gains tax on the sale of U.S. stocks, as long as those gains are not effectively connected to a U.S. trade or business.
@@TeodorDraganov My question is about US estate tax specifically, not capital gains/dividends though. Those are clear to me.
@@orbetobe If you're subject to those I don't see a reason why not to the others. Unfortunately :/
@@TeodorDraganov Have you watched the video? 😀
@@orbetobe Yes 😅
what about index funds?
Holy flying **ck! Well, this is an eye opener. Thank you very much and greetings from Czech Republic.
I will keep my US stocks for now, but I will definitely move out of the positions eventually. We pay no capital gains tax after holding an asset for 3 years
thanks for the valuable input!
Not Angelo understanding US IRS rules more than me (US citizen) lmao. Great video!
One of the best videos ever on etf's. You are a shining star. Keep it up. You deserve a lot of subscribers, views and likes,
What about the Ishares Core S&P 500 ETF ?
Even tought it has american stocks its exchange is in europe with euros
my broker doesn't even allow me to buy ETFs that are not UCITS.
Yes, "luckily" very few will be able to buy US ETFs in the first place, unless you go out of your way to find a US broker that still takes EU clients. If you're using Interactive Brokers Ireland, Trade Republic, Degiro etc. you won't be able to buy US-domiciled ETFs anyway
For ETFs domiciled in Luxembourg, the withholding tax should not matter if the broker applied for W-8 BEN automatically, right?
It still matters if the ETF is physically holding US stocks (so not SWAP-based), since the ETF itself already has to pay those taxes when dividends are paid by US stocks - it has nothing to do with the broker
@@AngeloColomboFi thanks for the response, but so that it is entirely clear to me, we talk about withholding tax right? If that is the case, depending on tax treaties between the countries, you may still be able to settle the withholding tax of a Lux-domiciled ETF with your country' tax office, right?
Great video. Thank you for the warning, Angelo. One question. During your research, have you come across a comprehensive definition of "assets situated in the US"? Obviously, buying KO at NYSE is such an asset, but what about e.g. AAPL at XETRA or BNS (canadian bank) at NYSE? Or ADRs? In short, what is the criterion - the exchange, the ISIN, or just of these is sufficient for the asset to qualify as US-based?
Location of the company
Nice and informative video as always Angelo, thanks
Great video Angelo!
An Spaniard here. How does this apply to countries with double taxation treaty with USA like Spain? I believe you declare capital gains in Spain and can offset any type of taxes applied from USA
I´m in the same situation, so I would also like to know since Spain is very complicated 🙄
Thanks for this explaination!
Hi why interactive broker do not allow buy etfs ? I need permission,please halp me what to do
Great video! Didn’t know this..
So which brokers allow EU investors. I've got a US bank account because I work in the US. So wiring money is no issue, I'd like to hold US ETF since with a good strategy you could get above 20% CAGR.
if you sign the 8BEN the second point is muted, you dont get taxed at all
So in the event of death, every broker worldwide reports to the US Treasury Department whether there are any US securities in the custody account?
Thank you for the information. I did not know that. Do you know if it is the same when we buy u.s. stocks ,in euros, in germany by tradegate ?
Yes, sadly it doesn't matter where you buy US stocks, they're still US-domiciled assets
IWDA and chill.
Thanks again for a very informative video!
I have Swedish citizenship, but lets say you live in a country with no Capital Gain Taxes (Singapore), does this still apply ?
Yes, sadly Singapore does not have an estate tax treaty with the US, so US-domiciled assets above $60K total would be at risk of up to 40% tax
I had no ideea about this silly tax and yes, It will impact my investments. Great video, thanks for sharing the information 😊
Thanks Angelo! Your only channel justify my TH-cam subscription 😅 continue the great work
Which platform do you recommend for Greek investors? Thank you for your time
Interactive Brokers and Trade Republic (both linked in the description) are the two brokers I use & recommend the most, due to their low fees and what they each offer. Both of them are available to Greek investors :)
Why accumulation etfs do not pay taxes on dividends they reinvest ?
They do pay withholding taxes as well, or rather they're withheld at the source (eg. 15% on US dividends if the ETF is based in Ireland)
I think the 40% tax on inheritance doesn’t apply to usd etf bond ? Am I correct or wrong
I think you're correct - as far as I'm aware, there is no estate tax on US bonds. And since you mentioned ETFs, there is no estate tax on any UCITS ETF (so basically any ETF we're able to buy via Interactive Brokers Ireland or Trade Republic for example).
@@AngeloColomboFi thank you for helping
@@AngeloColomboFi does this also work for for example scalable capital?
What you mean - I cannot buy and hold nvidia for example?
You can, you can't buy us etfs.
Of course you can - just be aware that if you hold more than >$60K of US stocks and if you're in a country without a US estate tax treaty, your heirs may lose a large portion of your stocks value to US taxes
Gem of a channel! Finally got the time to write up and take notes of your videos. One question, when investing on IBKR, your limit section automatically fills in and mine doesn't - how did you enable this? I just switched to tiered pricing
SO I have VUSA, but my market is Borsa -Italia and it is accumulating so is that good?
Yup, any UCITS ETF (like VUSA) is perfectly fine. It's pretty much impossible to buy US ETFs anyway on regulated brokers like IBKR or Trade Republic anyway due to EU regulations
@AngeloColomboFi thanks for confirming you sir are doing great service
So, based on that VUSA and VUAA which are UCITS and also Ireland domiciled are good options? If yes, what about this ridiculous EU rule for brokers to offer the relevant info in the local language of the investor? To this day, DEGIRO and Interactive Brokers do not allow us to buy VUSA/VUAA. Any ideas how to overcome this?
The EU makes the lives of young investors difficult in general. They don't even raise the guarantee limit from the laughable 20.000 euros compared to the 500.000 USD that exists in the US.
Yes, those or any other UCITS ETF is not a problem. What country are you based in? What error message do you get on Interactive Brokers when you want to buy VUSA? I'm asking since I assumed there were no such issues for investors from all over Europe on IBKR.
And yes, I also don't like that investor compensation is so ridiculously low in Europe, I talked about it here: th-cam.com/video/U47v1DkQRQk/w-d-xo.html
While it should never be needed (only in case of fraud), it would still let every EU investor sleep better at night.
@@AngeloColomboFi Greece. DEGIRO doesn’t allow us to buy VUSA or any other ETF, for Interactive Brokers I haven’t tried it, but I know it doesn’t work either.
I just checked the Greek Trade Republic asset page and both VUAA and VUSA are definitely tradable there: angelo.fi/trep
Could be an alternative to look at :)
@@AngeloColomboFi Thank you, I will
Hi! Very useful video, thank you very much. How about reverse situation, I am currently resident of Greece but plan to move to the US in 5-10 years. If I have Europe base ETF, will there be tax implications in the US? 🤔
My pleasure! Not sure about that, I think you would probably need to figure out how to tax reinvested dividends every year though if it's an Accumulating UCITS ETF.
Wait a second, now I'm remembering you have no tax on UCITS ETFs in Greece - in that case, just selling your shares tax free when you leave and buying an ETF locally is likely the best/easiest solution
Thanks for valuable info! Does this apply also to US stocks listed on european exchanges?
Yes, sadly the exchange doesn't matter, as they remain US-based assets
So if I buy IBKR stocks, I should keep it under 60k?
The $60K tax-free allowance is for the total amount of US-based assets (eg. US single stocks) you hold and only becomes relevant if you were to pass away and if your country of residence doesn't have an estate tax treaty with the US. It's just something to be aware of when making investment decisions while keeping whoever may inherit them one day in mind.
It was just an example, because you like interactive brokers so much😊 and it is on the rise… So this implies only in cases of inheritance not when selling?
I am from Slovenia, aparently we do not have a treaty with the usa
Hey Angelo, what do you think about eur hedged etf in comparison to their unhedged counterparts?
Hi Angelo
I have FTSE All-World USD (ACC) from Vanguard and MSCI ACWI IMI (ACC) from SPDR. Are these two European base ETF? If not what can I do now and with which ETF can I replace them?
Thanks for your informative content ✌️
Yes of course, there's nothing to worry about! You can always check justetf.com (or the details in your brokerage account) if you're not sure about any of your ETFs. But buying US ETFs is extremely difficult as a European investor anyway
Easy check - take ticker symbol or ISIN number and look for whole name of the fund - if there is UCITS in the name, then yes, they are EU based. BTW - USA versions are never ACC
@@AngeloColomboFiis it bad to collect American utilities stocks as a European long-term investor?
If that's an area you like investing in, I'm certainly not the one to try and stop you :)
Just keep the US estate tax in mind further down the line, in case your country doesn't have a treaty with the US and you want to be able to pass on as much as possible to your inheritors one day
@@AngeloColomboFi is PayPal UK burdened with extra tax for European investors? Thanks for the answers.
I wasn't aware of this. I quite like the VUSA ETF, which is mainly American stocks obviously. It is based in Ireland though. What does that mean? Most high performing ETFs will have US stocks in them. It's hard to avoid.
Domiciled in Ireland (Europe) means it's not affected by US estate tax 👌
Hi Angelo. Thanks for your very helpful videos! I will very soon start investing and watching your contents helped me a lot to have a better idea of the investment world. I have a question for you though: I am based in Sweden, so my salary is paid in Swedish Kronor, which are very weak lately. Do you think I should still buy ETFs in euros or there are better options for me? My time horizon is at least 15/20 years.
Thanks
@angelo if you were to retire today, what would your portfolio look like and how would you go about withdrawing? Thank you so much! ❤
Depending on the size of your portfolio, it's probably not too hard for your heirs to withdraw your US assets before they are frozen, in order to avoid any estate tax. Though you'd probably not want to go vacationing there in the future, or buying more US assets...
Is this also for investors that are based in the netherlands ?
No, Netherlands has an estate treaty with the US.
Hmmm, not sure about that. Never heard about funds bought in another country would pay IHT. I’m in the U.K. and have VUSA etc, I don’t expect inheritors to pay any tax to the U.S. regardless of value. They will to the U.K. unless it’s in a pension
VUSA is domiciled in Europe (Ireland) anyway, so that would not be counted for US estate taxes. And the UK has an estate tax treaty with the US - still, that does not mean you would not need to pay taxes to the US if you own more than a certain amount of US stocks or other US-domiciled assets, no matter where they were purchased: brodies.com/insights/wills-and-estate-planning/the-interaction-between-uk-and-us-taxes-on-death/
@@AngeloColomboFi Well, good luck with that one. If there’s IHT due, the HMRC will take it
Does estate tax apply even if you sign W 8 BEN form?
Thanks so much for this video, I had no clue. Living in Switzerland and mostly buying US-ETFs. It seems we do have an estate tax agreement with the US, but I had no idea about the formalities to be addressed within the 9-month deadline.
If you look at total return europe is With 6% less then US stockmarket everage. Especially in tech sector US 28% return europe around 7% in tech.
Your gains in US tech is 4 times of eu.
Yup, if you ignore the US market then some of the sectors are screwed 😅
He is not talking about investing in eu eft but etf that are domiciled in eu but for sure have us stocks 🙃
Hi Angelo, thanks for the informative vid. What do you think of SPYL? I'm base din Ireland and this is the ETF i've chosen
Likely the best (due to lowest cost) S&P 500 ETF that's currently available! I personally prefer investing globally compared to just the US, but that's for you to decide :)
@@AngeloColomboFi thank you for the response. Would you still recommend FWRA over VWCE? My time horizon is 25 years and so I still believe S&P will hold out.
sp500 are indeed us based companies but their revenue is worldwide.. think apple/tesla/Microsoft etc
Thank you!
withholding taxes exist also in Europe, within the EU too. It's generally ridiculous unfortunately
Thanks Angelo for the useful information. Are us stocks in european exchange xet is also included in us taxation law?
Sadly yes, it doesn't matter where you buy US stocks, they're still US-domiciled assets
Bad idea to invest in the strongest economy in the planet through a UCITS ETF that is tax free? 😅
Thank you Angelo! What do you think of 212 platform?
@angelo So vwce is ok because is ucits?
Yes of course
thank you Angelo, does this also hold true for swiss investors?
Switzerland has an estate tax treaty, so it's not as much of an issue for you, unless you ever decide to move to another country. But since you have no capital gains taxes, you could just sell at that point and switch to UCITS ETFs for example
@@AngeloColomboFithanks
I am tax resident in Ireland so Irish tax law means I have to pay 41% tax on all capital gains on offshore funds (not shares) and 41% on all unrealised gains on funds after 8 years, so if you were short of cash you could have to sell shares to pay the tax. And all Irish investments are subject to 25% DWT, so my tax advisor told me not to invest in any Irish investment or any offshore investment fund. I can only invest in UK investment trusts/companies and USA ETFs which are deemed as shares not funds. As far as USA estate tax is concerned make sure that all your investment accounts are in yours and your wife's name, and once the surviving partner looks less likely to last much longer sell up and move the funds back to your native country.
Yeah, the 41% tax on unrealized ETF gains in Ireland every 8 years is ridiculous, I really hope that is changed soon...
Since you have an estate tax treaty in Ireland, US ETFs may indeed be attractive as an alternative if you have access to them, as long as you don't move somewhere else