wasabi wrote: » The deemed disposal regime is a really serious tax drag that will take huge bites from your long term investment returns.
wasabi wrote: » 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.
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?
Dardania wrote: » Makes perfect sense - really well explained. Would a possible solution be to sell the whole lot every 8 years? You realise all the gains at that time, and are liable for the tax anyway? In comparing UCITS and non-UCITS tax regimes, it's clear that 41% applies to the UCITS disposal -what about non-UCITS - is that the 33% number? And is there USC or PRSI applied to the non-UCITS number? One advantage I can think of for UCITS ETFs is that you can get accumulation share classes, whereas with US, they're obliged to pay out dividends (which have a dividend witholding tax)....maybe that mitigates the hassle of selling every 8 years?
Prezatch wrote: » Not to mention the administrative pain in the arse it would be to note the 'deemed disposal date' for every purchase you make. You also don't get the annual exemption and are charged a considerably higher tax rate than CGT. If I held these ETFs all I would do right now is nothing. Continue saving, wait for Degiro to get the documentation in order and then continue buying the US ETFs after that. No panic
NotVeryHappy wrote: » I was looking at GLD and IAU. Is there a EU equivalent?
Mitchell Short Salesperson wrote: » Perhaps a silly question but am I right in thinking that the deemed disposal is simply that - deemed, and you can indeed pay the tax bill from a cash source and keep the original holdings? It's poorly explained on revenues site (as with most things).
Viscount Aggro wrote: » If you open an online account with a US broker, make sure you declare it to Revenue, because its an offshore account.
Viscount Aggro wrote: » I am going by the Taxes Consolidation Act 1997 Section 895 to which Form 11 refers, which says: “deposit” means a sum of money paid to a person on terms under which it will be repaid with or without interest and either on demand or at a time or in circumstances agreed by or on behalf of the person making the payment and the person to whom it is made; “foreign account” means an account in which a deposit is held at a location outside the State, for whatever purpose; With such a general definition it seems quite possible that a foreign brokerage account is a "relevant account" - it seems there is no choice but to declare it, which is what Revenue suggested anyway. Remember that a brokerage account has both securities and cash account element to it. I know because I work in the industry.
ronivek wrote: » Hey guys, So is the only option for now (until/unless KIDs are completed appropriately for them to be listed again on Degiro) to go with a US-based brokerage if we want to avoid the 8 year disposal issue? Would anyone have any recommendations for a brokerage where that's possible? The few I've looked at all require US residency...
Cute Hoor wrote: » Firstrade ($2.95 per trade), TDAmeritrade ($6.95 per trade), and IB (0.1% with minimum for some exchanges), all take Irish clients. A piece of cake to set up. TDAmeritrade do some commission free ETFs but no Vanguard as far as I can seehttps://research.tdameritrade.com/grid/public/etfs/commissionfree/commissionfree.asp
Mitchell Short Salesperson wrote: » Any recommendations on which of the above is best in terms of the trading platform etc?
Cute Hoor wrote: » All 3 are grand but I find the Firstrade website the most user friendly and I find them very good to deal with, wouldn't be critical of any of them though. Firstrade have a special offer now, refer a friend and both get $50 if the friend signs up, if you're interested pm me, no pressure.https://www.firstrade.com/content/en-us/promos/referafriend/
jive wrote: » Estate tax issues relevant for these accounts I assume (40% on anything exceeding >$60k)? Revenue's deemed disposal rule is such a pain. With the pension crisis on the horizon I don't see how they can still insist on those penal rules for private investments.
wasabi wrote: » jive wrote: » Estate tax issues relevant for these accounts I assume (40% on anything exceeding >$60k)? Revenue's deemed disposal rule is such a pain. With the pension crisis on the horizon I don't see how they can still insist on those penal rules for private investments. AIUI the the estate tax issue is the same for US domiciled shares/ETFs/funds regardless of whether held in a European or US based brokerage. The deemed disposal is bloody annoying. We should all complain to our TDs TBH. Squeaky wheel and all that. I would also dearly love a tax-free dividend allowance similar to the UK has and to increase the 1270EUR CGT allowance - to be at least doubled, considering it hasn't been touched in something like 20 years. And much more transparency in pension fund fees, although I guess KIDs do help here. Haven't seen any KID for my Irish Life pension funds yet though!
