In previous posts, I discussed index investments, where you can buy and hold broad-based and diversified index ETFs to gain the total market return. Most of the popular index ETFs are domiciled in the US. If you are an international investor, not a US taxpayer (like me), this creates a tax burden for you and reduces your return. Let me explain.
What Does ‘Domicile’ Mean?
It means ‘being a lawful permanent resident in a particular jurisdiction’. Investment funds have a domicile, this affects the applicable legislation including taxation.
Depending on your country of residence, your country may or may not have a tax treaty with the US. Only a few countries have tax treaties with the US, and Singapore is not one of them. Hence a Singapore investor like me, when owning US-domiciled investment funds, is subjected to US dividend withholding tax and estate tax. In plain language, for any US investment funds I own, each time when I receive a dividend, I will have to pay a 30% dividend tax to the US government. In addition, when I pass away, my US investment funds are subjected to a heavy estate tax ranging from 26-40% depending on their value. That’s a lot of money given to the US government!
The Solution?
Buy Ireland-domiciled ETF instead. These are the investment funds domiciled in Ireland, and a lot of them are listed in the London Exchange instead of the New York Exchange. Ireland-domiciled ETF only has a 15% dividend tax obligation and doesn’t have any estate tax implications. Most of the popular US-domiciled ETFs (like SP500 funds or All World funds) have equivalent Ireland-domiciled ETFs. Ireland-domiciled ETFs might have slightly higher expense ratios but the saving on taxes is significant. Do your homework, and don’t give most of your money to Uncle Sam (US government).
在之前的帖子中，我讨论了指数投资，您可以通过购买和持有大众且多元化的指数 ETF，以获得市场总回报。大多数流行的指数ETF都在美国注册。如果你是国际投资者，而不是美国纳税人（像我一样），这会给你带来税收负担并减少你的回报。让我解释。
首先，“domicile”这个词是什么意思？ 它是指“成为特定司法管辖区的合法永久居民”。 投资基金也有它的 domicile，这会影响适用的立法，包括税收。
根据您居住的国家/地区，您的国家/地区可能与美国有，也可能没有税收协定。只有少数国家与美国有税收协定，新加坡不是其中之一。因此，像我这样的新加坡投资者，在拥有美国注册的投资基金时，需要缴纳美国的股息预扣税和遗产税。说白了，我持有的任何美国投资基金，每次收到股息，我都要向美国政府缴纳30%的股息税。此外，当我去世时，我的美国投资基金将根据其价值缴纳26-40%不等的高额遗产税。那是给美国政府的一大笔钱！
解决方案？改为购买爱尔兰注册的ETF。这些是在爱尔兰注册的投资基金，其中很多在伦敦交易所而非纽约交易所上市。爱尔兰注册的 ETF 只有15%的股息税义务，并且没有任何遗产税。大多数流行的美国注册 ETF（如 SP500 基金或 All World 基金）都有类似的爱尔兰注册 ETF。爱尔兰注册的 ETF 的费用可能略高，但可以节省大量税款。做好功课，不要把大部分钱给山姆大叔噢（美国政府）。
#irelanddomiciled #domicile
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