Personal Investments • Re: Ireland domiciled ETFs: how can a G4 visa holder in the US buy them?

Hi,

I'm back with an update and with yet more questions. I would appreciate any additional clarifications.

If you get a useful response from Fidelity, perhaps you could post back; that might help someone in future.

I managed to enable International Trading in the Fidelity platform, and could find and buy Ireland-domiciled ETFs.

Now, the question:

According to https://www.bogleheads.org/wiki/Nonresi ... ciled_ETFs: "When looking at the dividend yield shown on an ETF's factsheet, take care to understand that for the portion of the dividend that comes from underlying US stocks, US domiciled ETFs will show this dividend portion as gross, but Ireland domiciled ETFs will show it net of 15% US withholding tax. This can make it appear as if Ireland domiciled ETFs pay out lower dividends. And in practice, they may (depending on what assets they hold); it is just that if you do not live in a country with a US tax treaty, you will lose 30% of every US domiciled ETF's dividend in broker US tax withholding, whereas there is no broker tax withholding for any country for an Ireland domiciled ETF."

Let's assume I buy through Fidelity an Ireland-domiciled ETF with US holdings. If my understanding of the above is correct, the dividends I would get from the US holdings contained in an Ireland-domiciled ETF are already net of the 15% US withholding tax. But then, since I'm a NRA with a US Fidelity account, Fidelity will apply a flat 30% tax on the dividends I get (what they call "Non Resident Tax"). Does that mean that, as a G-4 visa holder (NRA living in the US), I will face the 15% withholding applied by the ETF, and then an additional 30% withholding applied by Fidelity? The same question holds for capital gains if I sell the same ETF at a profit. Thank you very much in advance!

Caveat - I'm no Ted Swippet nor am I in your position. However, I'm a UK citizen/US Permanent Resident but before that spent some time on a B1 visa and then H1B's many moons ago. Suffice to say US visa stuff tends to be etched in one's mind, and still piques my interest.

I don't think so. The Ireland-domiciled ETF operates based on the US-Ireland tax treaty thus the EFT itself is subjected to just withholding the 15% US tax on dividends and as you're not Irish, no tax obligation there. So, if for example the ETF has investments in S&P 500 that receives dividends, just the 15% US withholding applies.

My understanding is, as a G4 you are not subjected to US Fed income tax thus no cap gains (I presume no state taxation either).

I don't know the specifics for how you opened your brokerage account because presumably you don't have the typical US Soc Security number which acts as the tax identification number linking a person to the IRS that US based brokerages would require. Regardless, even for me domiciled in the US if I sell investments in my brokerage no tax is withheld by Fidelity. They do issue me a 1099-B which basically is a document summarizing my short-term and/or long-term lost/gains, which I'd report when filing annual US taxes. The brokerages will submit to IRS all 1099's (there's different types), thus the onus is on the individual to report correctly. But I'd assume irrelevant for your since you don't need to file US taxes.

Obviously, in the event you sold investments and for whatever reason Fidelity issued you tax information documentation, I'd be inclined to hold on to it just in case you ever needed to follow up with the IRS.

All the best.

Statistics: Posted by RedCabin — Fri Jun 14, 2024 12:38 am

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