Author Topic: Taxation of non U.S investor investing in U.S market  (Read 409 times)

Toni1994

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Taxation of non U.S investor investing in U.S market
« on: May 12, 2018, 08:45:45 AM »
Hello everyone.
I am new in this area of investing but would like to learn and know more. I live in Europe and I am planning to invest in U.S stock market, so I am concerned about taxation issues. My questions regarding the subject are:

1. After paying taxes to U.S government of 30%(excluding capital gains) would I be subjected to the taxes in ma native country and if I would, is there any way this issue be overcomed of minimized.

2. What happens if I, for example, decide to reinvest the dividend, that is, not have any distribution, but simply to reinvest it in a fund? Does it, in some way, reduce the taxes?

Thank You for your answers.

daverobev

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Re: Taxation of non U.S investor investing in U.S market
« Reply #1 on: May 12, 2018, 11:42:13 AM »
1. Usually there is an agreement that reduces the withholding tax to 15% from 30%, but it depends on country. You can generally claim whatever foreign tax paid as a credit in your own country. If inside a retirement account, again depending on the double taxation agreement, there may be no tax taken at all. If not inside a sheltered account, if your own country is taxing you at a percentage greater than the 15 or 30%, then you would have to pay the extra. If there is no double taxation agreement, you... well.. get taxed twice, once by the US and again by your own country. Very very unlikely though.

2. No. Any tax that is due to the US will be taken before reinvestment occurs.

Here's a nice list of countries: https://www.irs.gov/businesses/international-businesses/united-states-income-tax-treaties-a-to-z

Oh, also, it may depend on whether you are investing in US domiciled funds directly, or in some kind of wrapper (ie, a Euro denominated ETF that is domiciled in Ireland or Luxembourg, say), if you are investing inside a retirement account. Otherwise not.

Toni1994

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Re: Taxation of non U.S investor investing in U.S market
« Reply #2 on: May 12, 2018, 11:56:28 AM »
Thank You daverobev, you really explained it.

I would just like to ask you about retirement accounts. Can I, as a European, invest in a U.S retirement account, for example, one of the Vanguard index sheltered funds?

Thanks :)

daverobev

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Re: Taxation of non U.S investor investing in U.S market
« Reply #3 on: May 12, 2018, 01:28:28 PM »
Thank You daverobev, you really explained it.

I would just like to ask you about retirement accounts. Can I, as a European, invest in a U.S retirement account, for example, one of the Vanguard index sheltered funds?

Thanks :)

Tax shelters are given by your country of residence. You won't get any 'room' to invest unless you live there, generally. Best to check into what your country has.

Generally inside shelters you can then buy anything. It depends on the type of account, of course, but you can get brokerage accounts inside whatever shelter, or mutual fund, or whatnot.

Toni1994

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Re: Taxation of non U.S investor investing in U.S market
« Reply #4 on: May 13, 2018, 12:56:39 PM »
Aha, I get it now.

Thank You, you saved me a lot of time googling this information :).