Why US ETFs Or Stocks Are A Bad Idea (European Investor)
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Angelo Colombo23 Sept 2024, 16:17 UTC
AI-generated source summary
The video discusses the potential tax implications for European investors holding US-domiciled ETFs versus European UCITS ETFs. It highlights that US estate tax can affect non-US investors holding US assets, including US stocks and ETFs, if their total US-domiciled asset value exceeds $60,000. For instance, a $1.2 million portfolio with 30% in US assets could face a 40% estate tax on the US portion above the exemption, potentially resulting in a $456,000 tax liability. However, if an investor's home country has an estate tax treaty with the US, the tax implications can be significantly reduced, often to a 15% withholding tax on dividends and a more favorable estate tax exemption, as seen in countries like Ireland. Accumulating ETFs are favored for their tax efficiency, as dividends are reinvested rather than distributed. The analysis emphasizes that for European investors, domiciling investments within Europe, particularly in countries with favorable tax treaties like Ireland, offers significant tax advantages for both dividend income and estate planning compared to direct US investments.
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Angelo Colombo
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