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.
Keep going mate I started at 41... was in 7K debt and living in my overdraft. I'm now debt free have a 15K emergency fund. 20K saving pot and just surpassed ~£150K. Diversification and a clear understanding of your financial goals are key... I am almost 43 now!
I lost a lot chasing individual stocks and I feel pretty silly for not understanding how investing works. I have a double major in economics but I’ve been trying to make sense of the market. Well done on profits!
Keep it simple, buy things you understand, take some risk but don't try to shoot the lights out. I’m invested in ETFs, equity index funds, and individual stocks and use a F.A. On average, she takes 10% of earnings, but using *Lina Dineikiene's* system makes it much more hands-off. I conservatively follow her recommendations and market entry and exit points, and tbh this makes it fairly simple for me... I am convinced it's not just hard work but smart work :-)
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.
Hi! I'm from New Delhi looking to start investing in the US stock market with $80-100k. Should I focus on index funds or individual stocks? Also, any tips on handling currency exchange rates? Thanks!
With $80-100k, I'd suggest a mix of index funds and a few individual stocks. Diversify and watch currency rates by converting in smaller amounts. Good luck!
Personally I put down 1.3m$ on few ETFs, still diversifying. It was this time last year I made my first million with a liquid 200k. Invested it with a CFP here in TX, I get weekly pay out which I invest back on long term ETF's. Google will be a huge buy for me when the market bottoms.
*Marissa Lynn Babula* is the licensed CFP I use and im just putting this out here because you asked. You can Just search the name. You’d find necessary details to work with to set up an appointment.
I curiously searched for her full name and her website popped up immediately. I looked through her credentials and did my due diligence before contacting her.
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.
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
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!
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
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.
This video offers valuable insights for novice investors who might unknowingly encounter issues with withholding and estate taxes. It's worth noting that non-residents have legal options to protect themselves from estate taxes. As an EU-based investor avoiding US instruments, I've found the main challenge is the limited range of options, particularly for high-yield income stocks and closed-end funds etc. While a single passive ETF strategy works well (it's my current approach too), those seeking more sophisticated portfolios might want to explore secure methods for purchasing US-domiciled assets. Appreciate the informative content as always.
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
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.
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
finally somebody talks about this. A lot of online personalities and brokers just encourage others to "invest". They absolutely ignore that the first rule of investing is that the money you invest has to retain its original value, then you need to get an intended rate of return after all the fees, taxes, commissions, currency conversions and insurance. It is very silly that people love to discuss gross percentages and make their decisions on profitability based on supposed historical performance which anyway represents gross growth figures and gross returns.
Nope, I am based in the Czech Republic, but I did purchase stocks through Fidelity in US and was very surprised with how much the return goes down after all taxes, fees etc. I am now sticking to mutual funds available through Sociéte Generale. They have mixed assets, but do have a local entity here in Czech Rep. They trade international stocks and commodities. Of course currency coversions eat up some of the growth.
Thank you for the information, Angelo! I have just started my investing journey this year --- a bit late, as I'm in my mid-thirties --- but your channel has been invaluable. As an expat living in Spain, who has lived in a few other European countries over the years, I have my work cut out for me (in as far as reading taxes legislation). Hopefully my family and I will manage to stay put for a while now, it will make retirement much easier to plan! Again, thank you for the video, and for the effort you put into keeping honest. Keep up the good work, you are helping many of us!
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?
If a fund (like VWCE, even if those are base in Ireland) holds U.S. stocks, those stocks are considered U.S.-situs assets, which could be subject to estate tax if their value (combined with other U.S.-situs assets) exceeds the $60,000 threshold for non-residents. If you invest substantial amount consider doing this using some sort of LLC
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.
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
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?
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 :)
Thanks you Angelo. I'm from Portugal and didn't know about estate tax in US . Fortnately i didn't invest on US stocks and ETF's. Only in European ETF'S.
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
Im not an investor, im an engineer but I was born in Serbia where I inherited a home. The home was worth around 50 000 euro just 15 years ago, now it is already worth 100 000 euro and I didnt touch it, no renovation no anything done to it. Why am i using this as an example? Well Eastern Europe has been showing significant year on year growth for the past 15-20 years and I dont see this trend stopping anytime soon. If I was to invest, I would either buy a property or invest in S&P 500 equivalent of Poland, Romania, Serbia or any country in that region really. They have all been experiencing a stable 5% year on year growth so you are literally guaranteed returns over time. I know its much riskier and much less popular than investing in already proven US stocks but US can only grow so much because its already fully developed. This other regions are growing much faster in comparison so its a no brainer in my opinion.
From the most interesting videos that you made till now . I have to say that would be interesting (at list for me) to make more videos for another countries like japan ;) Thanks alot Angelo
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?
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.
The only reason to consider using U.S. ETFs would be the opportunity to generate additional returns by using the options wheel strategy. Unfortunately, European ETFs do not have options. 🤷🏼
Thanks, I've never heard this potential disadvantage of individual US stocks.... I investing ~80% of equity part to UCITS ETF, but it would worth to reconsider it and go for 100%.
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?
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...
Yeahy, new video! 🎉 As always thanks for the insights. 💡 (Random side mark unrelated to Finances: Since I appreciate your strategic thinking and thought pattern, I would love to hear your insights about parenthood and/or the decision to become a parent. I'm struggling with the decision. Any ideas? (: )
I love being a dad, having a kid (a now almost 2 year old girl) was the best decision we ever made. Nothing else I've accomplished in my life comes close. It's an experience I would not want to miss, especially knowing how it feels now. Not saying it's easy, but it's so worth it every single day based on my experience :)
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
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.
Thank you for this information. I didn't know about this but yes, European brokers already protected me from buying US stocks and ETFs without my knowledge, so thanks to them I guess XD
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
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.
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?
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
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 :)
There is an equivalent of SCHD - FUSI, which you’re right is way way more expensive. About the topic - if I was living back home in Poland, which has flat 19% tax rate, I’d never touch single stocks, would purely go into accumulating FWRG, VUAG & XXTW 🤷♂️ although I’m not and UK has a tax wrapper account up to 20k £ a year so I’m not bothered and we only pay 15% tax on US stocks which is fine as US stocks are killing UK deadbeat stock
Hello Mati, Poland also has tax-exempt accounts (IKE and IKZE), which allow investors to receive tax-free dividends. Please don’t spread misinformation and do your research first. In addition, Polish economy and stock market is actually growing (unlike the UK) and Polish investors can take advantage of that. There are many great Polish stocks at reasonable valuations. The projections are that Poland will outgrow the UK economy by 2030. I’m Polish-American by the way.
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.
Best way to avoid estate tax is to share your brokerage account username and password with your spouse so that when you die they will immediately login and redeem your stocks. No one will know if it was you or someone else (your spouse) who logged-in and redeemed your shares and then wire the money to your local bank account.
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.
I'm from Portugal. The broker I use to invest, it's not a one from my country, for US based ETF like SPDR S&P500 ETC only allows CFD because it's a US based ETF, but for SPDR S&P500 UCITS allows to buy shares of the ETF because it's based in Europe, Ireland. Something to have in attention when investing is checking if you are really buying shares of the ETF or a CFD. If you are buying CFD that's not good for long term investment usually
Provavelmente eToro. Eu criei uma conta,mas depois de ler os termos e condições decidi não investir lá.Evito CFDs.Eu sou tcheco morando no Republica Tcheca e parcialmente no Brasil.
Thanks Angelo this is very important topic,i was aware of this kind of taxes especially the withholding tax and later on the estate tax and since my account is not close to 60k i will arrange any changes later on
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.
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/
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
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
Very informative video (as always) Angelo! Thanks! Since you mentioned it, can you make a video for the actions need to be taken when someone dies? What must hist children/wife do? Also, what if I want to pass my portfolio to my son (as soon as he is an adult)? How can one do this (I assume it depends on the broker....) Thank you once again!
@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)
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.
It feels like every European country has its own tax deal with both the US and EU. In many countries the US taxation on dividends is lower than in a neighbouring country also in the union
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.
Watching in my 40s... And only just starting I feel so behind!
Me too 😂 but learning fast
Keep going mate I started at 41... was in 7K debt and living in my overdraft. I'm now debt free have a 15K emergency fund. 20K saving pot and just surpassed ~£150K. Diversification and a clear understanding of your financial goals are key... I am almost 43 now!
You're so lucky that you started in your 40's! Many people don't even start in their 50's or 60's! So you're 10-20 years ahead of them:)
I lost a lot chasing individual stocks and I feel pretty silly for not understanding how investing works. I have a double major in economics but I’ve been trying to make sense of the market. Well done on profits!
Keep it simple, buy things you understand, take some risk but don't try to shoot the lights out. I’m invested in ETFs, equity index funds, and individual stocks and use a F.A. On average, she takes 10% of earnings, but using *Lina Dineikiene's* system makes it much more hands-off. I conservatively follow her recommendations and market entry and exit points, and tbh this makes it fairly simple for me... I am convinced it's not just hard work but smart work :-)
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 ;)
Hi! I'm from New Delhi looking to start investing in the US stock market with $80-100k. Should I focus on index funds or individual stocks? Also, any tips on handling currency exchange rates? Thanks!
With $80-100k, I'd suggest a mix of index funds and a few individual stocks. Diversify and watch currency rates by converting in smaller amounts. Good luck!
Personally I put down 1.3m$ on few ETFs, still diversifying. It was this time last year I made my first million with a liquid 200k. Invested it with a CFP here in TX, I get weekly pay out which I invest back on long term ETF's. Google will be a huge buy for me when the market bottoms.
I’m glad I found this conversation. My risk tolerance is high, and I want to take advantage of the upcoming market run. Can you direct me to your CFP?
*Marissa Lynn Babula* is the licensed CFP I use and im just putting this out here because you asked. You can Just search the name. You’d find necessary details to work with to set up an appointment.
I curiously searched for her full name and her website popped up immediately. I looked through her credentials and did my due diligence before contacting her.
WOW. Such an important topic that i never heard about before. Thanks for sharing!
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.
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 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
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!
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.
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
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.
Would love to see a video you discussing your thesis for btc and eth. Keep up the good work Angelo!
Another Great Video Angelo!! Greetings from Greece!
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!
This video offers valuable insights for novice investors who might unknowingly encounter issues with withholding and estate taxes. It's worth noting that non-residents have legal options to protect themselves from estate taxes.
As an EU-based investor avoiding US instruments, I've found the main challenge is the limited range of options, particularly for high-yield income stocks and closed-end funds etc.
While a single passive ETF strategy works well (it's my current approach too), those seeking more sophisticated portfolios might want to explore secure methods for purchasing US-domiciled assets.
Appreciate the informative content as always.
Great video, Angelo. On a subject that few people were aware.
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
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.
This is awesome and priceless information Angelo, thanks once again!
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,
You always provide such great information. Thanks :)
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
I had no ideea about this silly tax and yes, It will impact my investments. Great video, thanks for sharing the information 😊
finally somebody talks about this. A lot of online personalities and brokers just encourage others to "invest". They absolutely ignore that the first rule of investing is that the money you invest has to retain its original value, then you need to get an intended rate of return after all the fees, taxes, commissions, currency conversions and insurance. It is very silly that people love to discuss gross percentages and make their decisions on profitability based on supposed historical performance which anyway represents gross growth figures and gross returns.
Are u from the UK? Any recommendations? Just starting out and gonna open a HL account i think
Nope, I am based in the Czech Republic, but I did purchase stocks through Fidelity in US and was very surprised with how much the return goes down after all taxes, fees etc. I am now sticking to mutual funds available through Sociéte Generale. They have mixed assets, but do have a local entity here in Czech Rep. They trade international stocks and commodities. Of course currency coversions eat up some of the growth.
@@LordTRight Its so complex really isnt it? Ive been keeping mine in a savings account until i figure out what will be best for me based in UK
@@TheDwarburton HL's fees are too high
Thank you for the information, Angelo! I have just started my investing journey this year --- a bit late, as I'm in my mid-thirties --- but your channel has been invaluable. As an expat living in Spain, who has lived in a few other European countries over the years, I have my work cut out for me (in as far as reading taxes legislation). Hopefully my family and I will manage to stay put for a while now, it will make retirement much easier to plan! Again, thank you for the video, and for the effort you put into keeping honest. Keep up the good work, you are helping many of us!
Thank you!
I did not realize this and it’s is applicable to me.
Thanks Angelo! Your only channel justify my TH-cam subscription 😅 continue the great work
Not Angelo understanding US IRS rules more than me (US citizen) lmao. Great video!
IWDA and chill.
Thanks again for a very informative video!
Great video. Thank you for the tip.
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?
If a fund (like VWCE, even if those are base in Ireland) holds U.S. stocks, those stocks are considered U.S.-situs assets, which could be subject to estate tax if their value (combined with other U.S.-situs assets) exceeds the $60,000 threshold for non-residents. If you invest substantial amount consider doing this using some sort of LLC
@remmond3769 that would be great. Do you have any link to treaty info just to completely clarify this? Thanks for info btw!
Nice and informative video as always Angelo, thanks
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.
Hi, i prefer to watch yor portfolio updates. Please make this type of content more recent!
Best wishes from Bulgaria!
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.
thanks for the valuable input!
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?
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 :)
Great video! Didn’t know this..
Thanks you Angelo. I'm from Portugal and didn't know about estate tax in US . Fortnately i didn't invest on US stocks and ETF's.
Only in European ETF'S.
Thanks for this explaination!
VWCE and chill 😊
FWRA and chill 😋
SPDR and chill
Netflix and chill
Lower returns.
SPQR and chill
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 🙄
Im not an investor, im an engineer but I was born in Serbia where I inherited a home. The home was worth around 50 000 euro just 15 years ago, now it is already worth 100 000 euro and I didnt touch it, no renovation no anything done to it. Why am i using this as an example? Well Eastern Europe has been showing significant year on year growth for the past 15-20 years and I dont see this trend stopping anytime soon. If I was to invest, I would either buy a property or invest in S&P 500 equivalent of Poland, Romania, Serbia or any country in that region really. They have all been experiencing a stable 5% year on year growth so you are literally guaranteed returns over time. I know its much riskier and much less popular than investing in already proven US stocks but US can only grow so much because its already fully developed. This other regions are growing much faster in comparison so its a no brainer in my opinion.
From the most interesting videos that you made till now . I have to say that would be interesting (at list for me) to make more videos for another countries like japan ;) Thanks alot Angelo
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?
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.
The only reason to consider using U.S. ETFs would be the opportunity to generate additional returns by using the options wheel strategy. Unfortunately, European ETFs do not have options. 🤷🏼
Thanks, I've never heard this potential disadvantage of individual US stocks.... I investing ~80% of equity part to UCITS ETF, but it would worth to reconsider it and go for 100%.
Angelo, people are confused)) better to sell everything before death, but thats will be hard to predict for sure))
Or make sure you have no relatives 😂
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
Do synthetic ETFs avoid all these problems??
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...
Yeahy, new video! 🎉
As always thanks for the insights. 💡
(Random side mark unrelated to Finances:
Since I appreciate your strategic thinking and thought pattern, I would love to hear your insights about parenthood and/or the decision to become a parent.
I'm struggling with the decision. Any ideas? (: )
I love being a dad, having a kid (a now almost 2 year old girl) was the best decision we ever made. Nothing else I've accomplished in my life comes close. It's an experience I would not want to miss, especially knowing how it feels now.
Not saying it's easy, but it's so worth it every single day based on my experience :)
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
Just set up an LLC and hold your assets in it.
That's indeed a legal option to circumvent it
if you sign the 8BEN the second point is muted, you dont get taxed at all
ok, if you don't pass away, but just sell your us stocks with profit, will you be obliged to pay estate tax?
Thank you!
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.
@angelo if you were to retire today, what would your portfolio look like and how would you go about withdrawing? Thank you so much! ❤
Interesting, how do I go about it? I am still a newbie in this investment trading.I would sincerely appreciate any recommendations you have.
Thank you for this information. I didn't know about this but yes, European brokers already protected me from buying US stocks and ETFs without my knowledge, so thanks to them I guess XD
Hey Angelo! Starting my investing this week, your videos have helped me so much to understand all this better. 😊 Thanks!
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
So, I am a hungarian citizen living in the UK, Vanguard S&P 500 VUAG is safe?
thks a lot Angelo! big hug
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?
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 thank you!
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
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
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
I forgive you for the minor mistakes, thank you for the advice.
withholding taxes exist also in Europe, within the EU too. It's generally ridiculous unfortunately
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 :)
There is an equivalent of SCHD - FUSI, which you’re right is way way more expensive.
About the topic - if I was living back home in Poland, which has flat 19% tax rate, I’d never touch single stocks, would purely go into accumulating FWRG, VUAG & XXTW 🤷♂️ although I’m not and UK has a tax wrapper account up to 20k £ a year so I’m not bothered and we only pay 15% tax on US stocks which is fine as US stocks are killing UK deadbeat stock
Does FUSI pay any dividend?
@@radosval yep
Hello Mati,
Poland also has tax-exempt accounts (IKE and IKZE), which allow investors to receive tax-free dividends. Please don’t spread misinformation and do your research first.
In addition, Polish economy and stock market is actually growing (unlike the UK) and Polish investors can take advantage of that. There are many great Polish stocks at reasonable valuations. The projections are that Poland will outgrow the UK economy by 2030.
I’m Polish-American by the way.
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.
Best way to avoid estate tax is to share your brokerage account username and password with your spouse so that when you die they will immediately login and redeem your stocks. No one will know if it was you or someone else (your spouse) who logged-in and redeemed your shares and then wire the money to your local bank account.
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 👌
Very good!
I'm from Portugal. The broker I use to invest, it's not a one from my country, for US based ETF like SPDR S&P500 ETC only allows CFD because it's a US based ETF, but for SPDR S&P500 UCITS allows to buy shares of the ETF because it's based in Europe, Ireland. Something to have in attention when investing is checking if you are really buying shares of the ETF or a CFD. If you are buying CFD that's not good for long term investment usually
Em que corretora
@@sniper7427 eToro
Provavelmente eToro. Eu criei uma conta,mas depois de ler os termos e condições decidi não investir lá.Evito CFDs.Eu sou tcheco morando no Republica Tcheca e parcialmente no Brasil.
Thanks Angelo this is very important topic,i was aware of this kind of taxes especially the withholding tax and later on the estate tax and since my account is not close to 60k i will arrange any changes later on
good stuff!
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 🙃
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
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
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
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
Very informative video (as always) Angelo! Thanks! Since you mentioned it, can you make a video for the actions need to be taken when someone dies? What must hist children/wife do? Also, what if I want to pass my portfolio to my son (as soon as he is an adult)? How can one do this (I assume it depends on the broker....) Thank you once again!
i stick with Nvidia growth shares.
But i started to buy a couple dividen yield shares thats in Europe.
@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!
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 😅
It feels like every European country has its own tax deal with both the US and EU. In many countries the US taxation on dividends is lower than in a neighbouring country also in the union
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?