UK investor thinking of buying US ETF: what are the tax implications?

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Lauretta
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UK investor thinking of buying US ETF: what are the tax implications?

Post by Lauretta »

I am considering buying an ETF listed in the US as there's no comparable ETF in Europe. I have never done this before; I am wondering whether this will significantly complicate matters in terms of taxation and related paper work? (in which case I probably won't go ahead since I was going to invest only a relatively small amount).
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Valuethinker
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Re: UK investor thinking of buying US ETF: what are the tax implications?

Post by Valuethinker »

Lauretta wrote: Wed Oct 30, 2024 5:45 am I am considering buying an ETF listed in the US as there's no comparable ETF in Europe. I have never done this before; I am wondering whether this will significantly complicate matters in terms of taxation and related paper work? (in which case I probably won't go ahead since I was going to invest only a relatively small amount).
So you found a broker that would not block you via PRIIP? In Switzerland? Even though you are resident in the UK? Or did you use a sophisticated investor get out?

I suggest you read up on "HMRC Reporting funds" here and other places. If you are UK resident you do not want to own non-reporting funds.
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Re: UK investor thinking of buying US ETF: what are the tax implications?

Post by Lauretta »

Valuethinker wrote: Wed Oct 30, 2024 6:43 am
Lauretta wrote: Wed Oct 30, 2024 5:45 am I am considering buying an ETF listed in the US as there's no comparable ETF in Europe. I have never done this before; I am wondering whether this will significantly complicate matters in terms of taxation and related paper work? (in which case I probably won't go ahead since I was going to invest only a relatively small amount).
So you found a broker that would not block you via PRIIP? In Switzerland? Even though you are resident in the UK? Or did you use a sophisticated investor get out?

I suggest you read up on "HMRC Reporting funds" here and other places. If you are UK resident you do not want to own non-reporting funds.
Switzerland? Many borkers in the UK allow you to buy US ETFs provided you fill in a couple of forms
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Valuethinker
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Re: UK investor thinking of buying US ETF: what are the tax implications?

Post by Valuethinker »

Lauretta wrote: Wed Oct 30, 2024 7:00 am
Valuethinker wrote: Wed Oct 30, 2024 6:43 am

So you found a broker that would not block you via PRIIP? In Switzerland? Even though you are resident in the UK? Or did you use a sophisticated investor get out?

I suggest you read up on "HMRC Reporting funds" here and other places. If you are UK resident you do not want to own non-reporting funds.
Switzerland? Many borkers in the UK allow you to buy US ETFs provided you fill in a couple of forms
This really, really surprises me. Given our advice to US citizens who post here - who live in the UK and EU.

We should be updating our wikis here if this is the case.

So it's easy to get by PRIIP? You have done this?

What "couple of forms" are these? Is this the net worth test? (Was 250k EUR but I am out of date). Or as a Finance Professional experienced in non-standard investments?
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Re: UK investor thinking of buying US ETF: what are the tax implications?

Post by Lauretta »

Lauretta wrote: Wed Oct 30, 2024 5:45 am I have never done this before
But on the website they ask to complete 2 forms in order to invest
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Re: UK investor thinking of buying US ETF: what are the tax implications?

Post by TedSwippet »

Lauretta wrote: Wed Oct 30, 2024 8:13 am
Lauretta wrote: Wed Oct 30, 2024 5:45 am I have never done this before
But on the website they ask to complete 2 forms in order to invest
Which provider? Have you tried (honestly!) completing these forms, to see how they respond? If yes, what happened?

The firm involved will score your answers to their questionnaire. If you don't have enough relevant trading experience, buy/sell enough stocks or ETFs monthly, and so on, they will almost certainly reject your application.
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Re: UK investor thinking of buying US ETF: what are the tax implications?

Post by Lauretta »

TedSwippet wrote: Wed Oct 30, 2024 9:07 am
Lauretta wrote: Wed Oct 30, 2024 8:13 am
But on the website they ask to complete 2 forms in order to invest
Which provider? Have you tried (honestly!) completing these forms, to see how they respond? If yes, what happened?

The firm involved will score your answers to their questionnaire. If you don't have enough relevant trading experience, buy/sell enough stocks or ETFs monthly, and so on, they will almost certainly reject your application.
Ah ok, no I have not tried but one of them is W8BEN and then apparently one on investor's profile. I don't think I will do it, to be honest I thought of investing in the IBIT ETF because I read an article on Bloomberg this morning, but I don't think I'll do it.

But I mean, reputable stock brokers like iWeb say they provide access to the US market, don't they?
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Re: UK investor thinking of buying US ETF: what are the tax implications?

Post by Valuethinker »

Lauretta wrote: Wed Oct 30, 2024 9:28 am
TedSwippet wrote: Wed Oct 30, 2024 9:07 am
Which provider? Have you tried (honestly!) completing these forms, to see how they respond? If yes, what happened?

The firm involved will score your answers to their questionnaire. If you don't have enough relevant trading experience, buy/sell enough stocks or ETFs monthly, and so on, they will almost certainly reject your application.
Ah ok, no I have not tried but one of them is W8BEN and then apparently one on investor's profile. I don't think I will do it, to be honest I thought of investing in the IBIT ETF because I read an article on Bloomberg this morning, but I don't think I'll do it.

But I mean, reputable stock brokers like iWeb say they provide access to the US market, don't they?
You can deal in US stocks - individual companies.

However funds/ ETFs require a KID document. Since US listed funds don't have these, EU & UK brokers do not currently offer them. But you'd have to sign up and try.

Why don't you sign up and try and report back?

It's catch 22 for US citizens. One suggestion we sometimes make is to hold Berkshire Hathaway, which does not trigger IRS PFIC rules but HMRC views it as a share - so no reporting fund issues.
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Re: UK investor thinking of buying US ETF: what are the tax implications?

Post by Lauretta »

Valuethinker wrote: Wed Oct 30, 2024 9:42 am
Lauretta wrote: Wed Oct 30, 2024 9:28 am

Ah ok, no I have not tried but one of them is W8BEN and then apparently one on investor's profile. I don't think I will do it, to be honest I thought of investing in the IBIT ETF because I read an article on Bloomberg this morning, but I don't think I'll do it.

But I mean, reputable stock brokers like iWeb say they provide access to the US market, don't they?
You can deal in US stocks - individual companies.

However funds/ ETFs require a KID document. Since US listed funds don't have these, EU & UK brokers do not currently offer them. But you'd have to sign up and try.

Why don't you sign up and try and report back?

It's catch 22 for US citizens. One suggestion we sometimes make is to hold Berkshire Hathaway, which does not trigger IRS PFIC rules but HMRC views it as a share - so no reporting fund issues.
:oops: Oh I understand now
When everyone is thinking the same, no one is thinking at all
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