Author Topic: Can I avoid USA withholding taxes as resident of nowhere?  (Read 4496 times)

alwaysonit

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Can I avoid USA withholding taxes as resident of nowhere?
« on: September 22, 2014, 11:40:32 AM »
I plan to buy and hold ETFs.
I noticed that if I am investing via a USA based stockbroker such as Interactive Brokers I have to fill in a W-8BEN form.

I am not tax resident anywhere and so do not have a tax treaty to stop withholding tax using the W-8BEN form. So there is no way of stopping the USA government taking a withholding tax of 30% if I invest via a USA based broker. Is this correct, and is the withholding tax only on dividends paid or also on CGT when I sell my shares?

Sblak

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Re: Can I avoid USA withholding taxes as resident of nowhere?
« Reply #1 on: September 22, 2014, 12:00:48 PM »
What do you mean when you say "I am not a tax resident anywhere."

viper155

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Re: Can I avoid USA withholding taxes as resident of nowhere?
« Reply #2 on: September 22, 2014, 12:05:54 PM »
Yes, it is correct. But do not let this stop you. The rest of us will continue to support your footprint on society.

fed_stache

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Re: Can I avoid USA withholding taxes as resident of nowhere?
« Reply #3 on: September 22, 2014, 01:41:58 PM »
OK, I'm morbidly curious about that "not a tax resident of anywhere" part. That seems like it could be a rather profitable trick. Could you explain how it is accomplished and whether it involves moving to Somalia?

Bob W

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Sblak

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Re: Can I avoid USA withholding taxes as resident of nowhere?
« Reply #5 on: September 22, 2014, 02:14:19 PM »
Thanks for the link. Bob.  It is relevant but I don't know that it is complete.  It only talks about tests for being a nonresident of the UK.  It doesn't actually use the words, "not a tax resident of anywhere." 

I am still curious about the op and where she/he resides.  She mentions that she doesn't have a treaty to prevent the U.S. withholding.  I was only asking for more information, because the op doesn't contain much information.

fed_stache

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Re: Can I avoid USA withholding taxes as resident of nowhere?
« Reply #6 on: September 22, 2014, 02:30:38 PM »
Conceivably a UK resident could severe ties to the UK in accordance with those instructions and move to an oil state, perhaps in the Persian Gulf, that doesn't not tax individuals in the normal way (though of course still obtains revenue via customs charges, etc). Right? That would make the person "not a resident of a place that taxes income", though of course, still a tax resident who could be taxed. Also, unless said person was ok with living his/her entire life in this tax haven, dieing there, and not owning anything or living a substantial period of time in the same country as his/her family, that person would have to move home and pay taxes eventually.

alwaysonit

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Re: Can I avoid USA withholding taxes as resident of nowhere?
« Reply #7 on: September 22, 2014, 04:18:41 PM »
I'm a perpetual traveller and in the past few years have not fulfilled the criteria to be a tax resident of any country.

RetireAbroadAt35

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Re: Can I avoid USA withholding taxes as resident of nowhere?
« Reply #8 on: September 22, 2014, 04:21:11 PM »
Chances are pretty good that the country of your citizenship feels differently about that.

SwordGuy

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Re: Can I avoid USA withholding taxes as resident of nowhere?
« Reply #9 on: September 22, 2014, 06:06:55 PM »
Chances are pretty good that the country of your citizenship feels differently about that.

If you are a US citizen, I can assure you Uncle Sam wants his tax cut.

mozar

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Re: Can I avoid USA withholding taxes as resident of nowhere?
« Reply #10 on: September 22, 2014, 06:23:33 PM »
I think one of the benefits of being a citizen for tax purposes is being able to buy and sell property? So the US would take the 30% since the treaty is not applicable to you. I think you should talk to a tax attorney. I think your tax issues are outside the scope of this forum.

Paul der Krake

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Re: Can I avoid USA withholding taxes as resident of nowhere?
« Reply #11 on: September 22, 2014, 06:27:00 PM »
Chances are pretty good that the country of your citizenship feels differently about that.
My country of citizenship has yet to see a penny of taxes coming out of my pocket. The last address they have on file from me was 7 years and 3 countries ago, when I last renewed my passport at another consulate abroad.

The United States is the only first world country that gives a damn about its citizens' income earned abroad, and one of the reasons I will probably never bother becoming a US citizen.

@alwaysonit, please let us know what you find, it's highly interesting and could be useful to me in the future.

Jags4186

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Re: Can I avoid USA withholding taxes as resident of nowhere?
« Reply #12 on: September 22, 2014, 06:28:39 PM »
I think one of the benefits of being a citizen is when shit hits the fan in one of your fantasy trips the embassy will let you in.


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Paul der Krake

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Re: Can I avoid USA withholding taxes as resident of nowhere?
« Reply #13 on: September 22, 2014, 06:46:02 PM »
I think one of the benefits of being a citizen is when shit hits the fan in one of your fantasy trips the embassy will let you in.
You can be a citizen without being a tax resident. Good luck travelling anywhere while being truly stateless.

expatartist

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Re: Can I avoid USA withholding taxes as resident of nowhere?
« Reply #14 on: September 22, 2014, 06:57:25 PM »
Chances are pretty good that the country of your citizenship feels differently about that.
My country of citizenship has yet to see a penny of taxes coming out of my pocket. The last address they have on file from me was 7 years and 3 countries ago, when I last renewed my passport at another consulate abroad.

The United States is the only first world country that gives a damn about its citizens' income earned abroad, and one of the reasons I will probably never bother becoming a US citizen.

@alwaysonit, please let us know what you find, it's highly interesting and could be useful to me in the future.

Agreed, it's one reason I'm considering UK/Italian citizenship for the future.

This is from the UK-based article someone linked to previously:
"In the United States, by contrast, the mere fact of citizenship means that a US national living in a foreign country is still liable to pay income tax in America on his worldwide earnings with a credit being given for any taxes already paid or due in a foreign country."

The earned income credit is ~$90K. Not sure how this translates into investments overseas however.

There are a couple of posters here who have lived in/are living in Malaysia with the Malaysia My Second Home (MM2H) visa - Malaysia41. This can be a good place to get tax residency.

OP, thanks for the link to Interactive Brokers. I'm looking for somewhere to start with low-fee ETFs before my next US trip in 2 years.