What is the most tax-efficient way to invest in ETFs?
I've heard investing in Irish-domicile ETFs is the best way to go but I don't understand why or in general how ETFs are taxed.
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Nicholes Wong
01 Feb 2019
Diploma in Business Management at Nanyang Polytechnic
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Gabriel Tham
31 Jan 2019
Tag Team Member at Kenichi Tag Team
It's not specific to ETFs but rather the country taxes policy.
UK has a agreement with Singapore to waiver the dividend withholding taxes. Hence purchasing from UK you will get the full dividend amount.
Whereas in US, you have to forgo 30% of the dividend amount as tax. Means the dividend you received is just 30% less than the declared. You do not have to personally do tax filing or anything, its all automatic.
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US does not have a tax treaty with Singapore. So if you were to buy US stocks or ETFs, you will be charge 30% withholding tax on your dividends from US stocks/ETFs. Ireland have tax treaty with US. So Irish domiciled etfs only need to pay 15% instead of 30% for US stocks.