VTI/VXUS- Need guidance [India]

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sharukh
Posts: 375
Joined: Mon Jun 20, 2016 10:19 am

Re: VTI/VXUS- Need guidance [India]

Post by sharukh »

ConfusedbutEducated wrote: Sat Aug 29, 2020 3:56 am EU Domiciled UCITS ETFs
ETFs domiciled in Europe (normally with a UCITS structure) are taxed heavily by the Irish Revenue.

The Exit Tax regime applies whereby capital gains are charged at a rate of 41%. This is higher than the rate of capital gains tax normally applied to investment gains which is 33%. Dividend income is also taxable at 41% (USC and PRSI does not apply).

Even more punishing is that under the Exit tax regime your funds are subject to a “deemed disposal” every 8 years. This means is that every 8 years you need to pretend that you sold your ETF holdings, calculate 41% of your gains at that point in time and pay them to the Revenue personally. You could liquidate some of your fund to do this if you wish. This inhibits the accumulation potential of your fund.

Finally, the most punishing element is that you cannot offset losses in your ETF investment against gains on other investments. Even worse, you cannot offset losses in one EU ETF investment with the gains in another!
Hi ConfusedbutEducated,

Can you pls share an update ?
If you used Irish ETF, which one ? and how are Indian taxes/filing handled ?

Thank you.
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