Dividend Tax vs IB Commissions

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martinlarosa
Posts: 18
Joined: Sun Jun 28, 2015 7:30 pm

Dividend Tax vs IB Commissions

Post by martinlarosa » Thu Aug 10, 2017 9:59 am

Hi, I'm and Argentinian, Non US NRA with no tax treaty.
Argentina taxes:
  • 15% of the gains for selling stocks without a treaty
    15% of the dividends from stocks without a treaty
    I don't pay taxes on non distributed dividends(pending confirmation but let's assume that for this post)
Argentina allows to deduct equivalent taxes paid in the foreign country
  • If I Pay 20% of income tax in the foreign country I pay nothing to Argentina.
    If I Pay 10% of income tax in the foreign country I pay 5% to Argentina.
    If I Pay none of income tax in the foreign country I pay 15% to Argentina.
Investing in VT in TDAmeritrade costs me 30% per dividend. Paid to the US
Investing in VWRD in IB costs me 15% per dividend. Paidto Argentina.
Investing in an Irish accumulating ETF costs me 0%. But I'll pay 15% on the gains when I sell.

It seems pretty clear that I have to go the accumulating ETF route so that the dividends can compound before paying taxes. Right? Right?

But I have two "concerns":
  • That works fine during the accumulation phase, but then when I start living off the protfolio, I wouldn't benefit from having part of the withdrawal money available already thanks to the dividends. Compounding interests are worth this little issue, right? :confused
  • I have to pay 10 dollars per month in IB as a maintenance fee. Commissions are deducted from those 10 dollars. But if I don't get dividends,
    I'll need to have money not invested in the account to make sure the fee gets paid. If I go the distribution route, I can reinvest dividends with those ten dollars I have to pay anyway, but the tax savings will be greater than 120 dollars so I guess it is not a good reason to go for VWRD. And 120 dollars is not a lot of money to have un-invested
My gut tells me I have to go towards the Accumulating ETFs, but I want to make sure I'm not missing anything with my particular tax situation. I know you guys would point that out :happy

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whodidntante
Posts: 2023
Joined: Thu Jan 21, 2016 11:11 pm

Re: Dividend Tax vs IB Commissions

Post by whodidntante » Thu Aug 10, 2017 8:55 pm

If your assertions are correct the accumulating ETFs are best. It's not a big deal to add $120/yr to your account to cover fees.

martinlarosa
Posts: 18
Joined: Sun Jun 28, 2015 7:30 pm

Re: Dividend Tax vs IB Commissions

Post by martinlarosa » Sat Aug 12, 2017 3:42 pm

Ok, thank you very much for your response.
I guess once I get a confirmation from my accountant I'll open an account with IB and move everything there. I'd have to also decide if it is better to hold one etf or the three that are mentioned in the Investing from Belgium wiki page.

Once I have everything confirmed, set up and tested we can create an Investing form Argentina wiki page.m :D

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