As a non US expat, should I use NYSE or FTSE ETF

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As a non US expat, should I use NYSE or FTSE ETF

Postby avant-garde » Wed May 08, 2013 1:01 am

Hello everyone,

I was wondering if I am better off investing through the NYSE or FTSE or any other exchange.

eg S&P 500 ETF TERs are 0.05% and 0.09% respectively.

But understand that I would be charged 30% tax on the NYSE ETF dividends.

My situation is that I am a Kiwi/British expat working in Qatar and I have a trading account with TD Direct Investing International (Internaxx) in Luxembourg and I have a W-8BEN on file.

To be honest I'm not 100% sure if the W-8BEN is a help as there is no tax treaty between the US and Qatar.

If there are any pearls of wisdom out there I would love to hear them.
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Re: As a non US expat, should I use NYSE or FTSE ETF

Postby avant-garde » Wed May 08, 2013 12:37 pm

Just to clarify I want to compare Apples with Apples, ie not comparing US stocks to UK ones, but rather the same (or equivalent) fund listed on the different exchanges.
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Re: As a non US expat, should I use NYSE or FTSE ETF

Postby backofbeyond » Wed May 08, 2013 4:15 pm

I'm an ex pat US, live in NZ, but have lived in various countries in the past 20 years. I think you should stick with FTSE, here's why:

If you aren't a yank, dealing with the US tax laws is a royal pain. Also, you have to look at how many times the money you invest is switched back and forth thru the various currencies. That alone could be the deciding factor. If you are investing PS into the US market, then the money is put thru the currency flux twice, once putting it in and once again when you take it out. While if you deal with an exchange that is in your own currency, you don't have that problem.

I realize that in both cases, the actual companies you buy may have various currency transactions but that is a wash, as in both cases you stated, it would be the same no matter what your home currency is.

The other thing to consider is how often are you exposed to the other currency. For example, upon retirement, we plan on living half the time in the States and half the time in Asia/Europe. So I have half of my stock invested in international bonds/stocks. If you don't plan on living in the US or spending money in US dollars, again, it may be better to stick with FTSE.

That's my 2 cents or is it pence? :D
The question isn't at what age I want to retire, it is at what income. - George Foreman
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Re: As a non US expat, should I use NYSE or FTSE ETF

Postby avant-garde » Wed May 08, 2013 11:17 pm

Thank you,

That is what I was guessing, mainly due to comparing 0.05% TER+ 30% tax to 0.09% TER.

Another big clue is that the broker doesn't accept US citizens due to the tax complications.

It also makes my investing options simple as Vanguard only have 4 ETFs listed on the FTSE.

AG
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Re: As a non US expat, should I use NYSE or FTSE ETF

Postby durrrr » Thu May 09, 2013 1:03 pm

avant-garde wrote:Thank you,

That is what I was guessing, mainly due to comparing 0.05% TER+ 30% tax to 0.09% TER.

Another big clue is that the broker doesn't accept US citizens due to the tax complications.

It also makes my investing options simple as Vanguard only have 4 ETFs listed on the FTSE.

AG

I'm pretty sure those 4 ETFs have quite a bit of overlap, make sure to read the prospectus so you know exactly what you are getting.
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Re: As a non US expat, should I use NYSE or FTSE ETF

Postby eugeneyan » Thu May 09, 2013 1:22 pm

It so happens that I'm pondering over this issue as well on viewtopic.php?f=1&t=116043&p=1690999#p1690999; maybe you'll find the discussion helpful.
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Re: As a non US expat, should I use NYSE or FTSE ETF

Postby avant-garde » Thu May 09, 2013 11:59 pm

Again thank you for your replies.

The 4 Vanguard funds will have some overlap but seem a good starting point. Hopefully they'll expand their range in the future - to cloud my judgement further.

Thank you eugeneyan for the link, some good advice there.

AG
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Re: As a non US expat, should I use NYSE or FTSE ETF

Postby eugeneyan » Fri May 10, 2013 9:49 am

After delving deeper into the 30% withholding tax, I'm uncertain of how it would work.

1. Would the tax be imposed on the source (i.e., on the dividends paid out by the US companies themselves)? If that's the case, then it doesn't matter which exchange you are listed on, as long as your ETF contains US companies then the 30% withholding tax will be imposed on the dividends. I wonder how the company would know which shares are owned by non-residents though.

2. Would the tax be imposed on the ETF? If that's the case, then the 30% withholding tax is not imposed on non-US residents that do not invest in the US market.

Would anyone who has experience with this issue be able to clarify please? Thanks!
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Re: As a non US expat, should I use NYSE or FTSE ETF

Postby avant-garde » Sat May 11, 2013 6:27 am

I believe that your broker is responsible for the withholding tax

See http://blogs.angloinfo.com/us-tax/2012/ ... -used-for/

Anyway I've made my mind up and going to invest outside of the NYSE probably through the FTSE
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