Investing with VG as a foreigner

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corner559
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Joined: Wed Nov 07, 2007 3:05 am

Investing with VG as a foreigner

Post by corner559 » Sun Aug 13, 2017 12:05 am

I've got a friend who lives outside the US and isn't a citizen of a country where VG has a presence. She's got dual citizenship in New Zealand and South Africa and splits her time between the 2. She's interested in investing in their index funds but doesn't know how to go about doing it. Would purchasing ETF's through whatever stock market exchange be available as an option to her? Any other workarounds for her?

TedSwippet
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Joined: Mon Jun 04, 2007 4:19 pm

Re: Investing with VG as a foreigner

Post by TedSwippet » Sun Aug 13, 2017 3:50 am

corner559 wrote:
Sun Aug 13, 2017 12:05 am
Would purchasing ETF's through whatever stock market exchange be available as an option to her?
Yes. This is one of the the usual ways that NRAs invest through Vanguard. She can find Vanguard's US domiciled ETFs on the NYSE, and their Ireland domiciled ones on the LSE and a couple of other EU exchanges. Interactive Brokers is a popular broker choice.

If buying the US domiciled versions, your friend will want to pay close attention to the way US taxes will affect her, including the potential for a US estate tax on holdings above $60k. Details here and here.

New Zealand has no US estate tax treaty, but South Africa does, so she might be able to obtain protection from US estate taxes under that. Check carefully before proceeding, though. The Ireland domiciled ETFs have slightly higher TERs than the US ones, but unlike the US domiciled ones, for NRAs they come without any dividend tax and estate tax baggage. Depending on circumstance, the higher TER may be more than offset by the reduced US tax on dividends.

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