What are some of the reasons people buy S&P500 listed on the US market and subject themselves to 30% withholding tax? I understand that Ireland domiciled ones only have 15% tax.? - Seedly
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Anonymous

Asked 4d ago

What are some of the reasons people buy S&P500 listed on the US market and subject themselves to 30% withholding tax? I understand that Ireland domiciled ones only have 15% tax.?

I am keen to buy on Kristal.AI due to no transactional fees for first 50k investments, but they only have SPY which is listed on US stock exchange. Advice please.

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Hi Anon,

If you're looking to trade frequently (move in and out of the market freqently), the US markets would be a better choice for the reasons Ethan mentioned, i.e. better liquidty and tighter spreads.

However, if you're in for the long run, the benefit of lower witholding tax will definietely outweigh the cost of the higher expense ratio of Ireland-domiciled ETFs.

To purchase Ireland-domiciled ETFs, you would need access to the LSE or other European exchanges. Currently, the cheaper brokers I am aware of that have access to these exchanges are Saxo and IBKR.

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Ethanslp
Level 4. Prodigy
Answered 3d ago

Usually, US listed stocks/ETFs have better liquidity, lower bid ask spreads, lower expense ratios, lower trading commissions.

That being said, transaction costs are one off payments while the lower withholding tax on Ireland domiciled ones will likely save you more in the long run. I would recommend going for CSPX.

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Jovan Lai
Jovan Lai
Level 4. Prodigy
Answered 3d ago

Hi Anon,

The tax only applies only to dividends and not capital gains, I think most people who buy the S&P500 are looking for capital gains and not dividends.

Like the rest mentioned, better spread, liquidity, expense ratio and asset under management may be the reason for natural attractiveness.

Another point to add is that for those using options, the options chain for ETFs such as SPY has more volume and demand, that helps get you a more well valued option position. Not every broker offers options on other S&P500 ETFs.

Happy investing!

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Frankie Rappaport
Frankie Rappaport
Top Contributor

Top Contributor (Aug)

Level 9. God of Wisdom
Answered 4d ago

Non-perfect world

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