US ETFs no longer purchasable in Europe

Everything you ever wanted to know about PRIIPs and KIDs but were afraid to ask:

https://esas-joint-committee.europa.eu/Publications/Technical%20Standards/JC%202017%2049%20%28JC_PRIIPs_QA_Final%29_clean.pdf

ffs....those were the products I was most interested in.

Any chance this will change at some stage in the near future?

Pile in, to securities that may no longer be tradeable by European residents?

Are you aware of market commentary, about multiple asset classes being at record high valuations? Have you read Goldman Sachs latest market commentary?

The management fees I have noticed are generally higher on UCITS ETFS than on equivalent us etfs that track the same thing

Great, best way of investing in Ireland is essentially killed off then. Not worth it if you have to suffer through the 8 year deemed disposal tax, hopefully vanguard do what's required and people in Europe can still purchase... some sickener if not!

Can't even rebalance existing portfolio with this change then given all my ETFs are vanguard US.

Frogdog wrote: »

Just spoke to a Certified Financial Planner/Qualified Financial Advisor, googled for extra information about this, and rang DeGiro myself as a customer - none of the OP's first post is true. A complete and utter campaign of misinformation and "alternative facts".

Everyone can stop believing the sky is falling down now.

Alternatively, if anyone wants, I can give you my PayPal account details and you can transfer your funds to me and I'll mind your money for you. A fool and their money are soon departed and all that!

OP's first paragraph (the bit in quotes) is correct, these new regulations are coming in from the 1st January. I doubt the rest is correct though, I expect brokers will be providing clients with the required KIDs, that's my understanding anyway.

So just wondering what are people planning on doing? Hold or sell and rebuy off a European exchange? My goal is to increase my holding in ETFs so not ideal having the same type in two difference exchanges and tax regimes.

Bugger - I have my eye on some US ETFs due to launch in January

Cute Hoor wrote: »

OP's first paragraph (the bit in quotes) is correct, these new regulations are coming in from the 1st January. I doubt the rest is correct though, I expect brokers will be providing clients with the required KIDs, that's my understanding anyway.

Well, DeGiro isn't returning any non-European ETFs in searches for me, and if I try to purchase any it gives me a dialog that says 'This product is closed for this customer'.

So yeah, there's restrictions in place for sure. Hopefully these get sorted out soon.

Otherwise I may need to look at setting up an account with Interactive Brokers or some other US based broker that is willing to deal with European residents.

Is anyone a customer of an international brokerage who is still able to trade US ETFs while resident/citizen of Ireland?

I've mailed InteractiveBrokers to check if they can support this (before I fund the account I set up) but they don't seem sure

Think I'm just going to sell and rebuy on the European exchanges. Very annoying considering the admin charges but I plan to hold for the long term so will just have to lump it.

Yeah I won't be bothering with ETFs anymore if we can't get access to the non-UCITS ones.

If DeGiro really have stopped offering the US ETFs to their customers (I'd be surprised if they don't eventually facilitate it) then you can set up an account with one of the US brokers (Firstrade, IB or TDAmeritrade), very little difference in trading cost, just means your account will be in $ and will have to be funded in $.

Dardania wrote: »

I get that not writing losses against other equities is a potential problem, but why is the 8 year deemed disposal an issue? From reading your linked document, it seems that when you actually dispose of the ETF that you subtract any taxes paid at the 8 year increments from the final tax? Not so bad?

Nope, it's still pretty bad. Usually you want to hold your investments for as long as possible, letting it just sit there and appreciate, and getting the benefit of growth on your capital gains as well as your initial capital - the whole idea of compound interest.

The 8 year deemed disposal means that every 8 years you've got to sell some units to fund the tax, 41% of the growth of the last 8 years. So if I start with 100 units of an UCITS ETF @eur100, and their value doubles over 8 years to eur200 each, then I have a eur20,000 valued investment with eur10000 gains. I would owe tax of 4,100 and so I would have to sell about 21 of my units to fund that (or of course pay from another cash source but let's leave that aside as it makes the comparison less clear).

Conversely, anyone holding under a normal capital gains regime has no bill due and gets to continue holding their full 100 units and benefiting from their price appreciation in the future. They will pay CGT on eventual sale but for right now, they still have 100 units sitting there appreciating, earning dividends, etc.

The deemed disposal regime is a really serious tax drag that will take huge bites from your long term investment returns.

Think of it like this - you have a magical pie that grows over time and does not go stale. When you eat the pie you owe the government a percentage of the pie. You much prefer to leave the pie for decades untouched and owe the government one single slice of your bigger pie than to be cutting the government a smaller slice every 8 years, ending up with a much smaller pie overall by the end