US ETFs no longer purchasable in Europe

wasabi · 25-02-2018 12:52pm

ronivek wrote: »

I believe the withholding tax is only relevant if you're avoiding your tax liabilities to the Revenue: they will count the 15% against your total tax liability in Ireland so your net should still be the same.

Unless you have no income tax liability to Revenue, then you will lose out on the 15%.

With personal tax credit you would not pay anything to the Irish revenue on the first 8K or so of income each year (except PRSI), so if you're not earning then you could be in this position.

Sucks if you're trying to live off of investments.

JungleMartin · 26-02-2018 1:00pm

Gordon Gekko wrote: »

Does anyone know how the 8 year deemed disposal rule works if at the end of the 8 years you're showing a loss on your UCITS ETF?

An example will probably explain my question more clearly:

I invest €10,000 at the start of year 1. The market does it's thing over the 8 years with the usual ups and downs. It happens that year 8 coincides with a bear market and I'm down 20% on my initial investment, so that at the 8 year anniversary my UCITS ETF investment is now worth €8,000. Clearly, I owe no deemed disposal tax, so I simply leave the UCITS ETF as is, and thereby it automatically rolls into a 'new' 8 year period.

My question is: does Revenue deem my investment to have started afresh at the start of the second 8 year period - and therefore do they rebase my 'acquisition cost' as being €8,000 for the purpose of calculating any gain in the second 8 year period?

So if for example we go through a phase of anaemic growth in the second 8 year term, at the end of which my UCITS ETF is worth €10,000 - do Revenue deem me to have made a 'gain' of €2,000 over the second 8-year term, and therefore hit me with 41% of the 'gain' made over the second 8-year term? Meaning I'm at a loss in real terms. Or do they look back to the original acquisition cost of €10,000 at the start of the first 8-year period, and therefore (correctly IMO) view me as having made no gain so far over the life of my holding with that particular UCITS ETF?

I can't seem to find a firm answer on this.

Sounds like a good question to ask Revenue directly, in writing.

Vermelho · 12-03-2018 6:56pm

ronivek wrote: »

I just opened one through Firstrade fairly easily; my only concern right now is how to withdraw moneys without incurring fees which would somewhat defeat the purpose of going to all the trouble in the first place.

I have the same issue with handling cash from dividends or trades. My plan had also been to open a Firstrade account to trade US ETFs however I have realized that I cannot open a cash management account with them as I live outside the US. I had thought I could use a Transferwise Borderless US account but they do not accept transfers from brokerages.

Does anyone have any advice on how to open a US domestic bank account from Europe? The only other option is to open a USD account in Europe but this would incur wire charges of $50 a pop!

ronivek · 12-03-2018 7:45pm

Vermelho wrote: »

I have the same issue with handling cash from dividends or trades. My plan had also been to open a Firstrade account to trade US ETFs however I have realized that I cannot open a cash management account with them as I live outside the US. I had thought I could use a Transferwise Borderless US account but they do not accept transfers from brokerages.

Does anyone have any advice on how to open a US domestic bank account from Europe? The only other option is to open a USD account in Europe but this would incur wire charges of $50 a pop!

I don’t think US investments are suitable if you plan to take an income. If you’re going long you can just setup an auto-reinvest with Firstrade.

How did you confirm that they won’t transfer to TransferWise US account?

Vermelho · 12-03-2018 7:51pm

ronivek wrote: »

I don’t think US investments are suitable if you plan to take an income. If you’re going long you can just setup an auto-reinvest with Firstrade.

How did you confirm that they won’t transfer to TransferWise US account?

Oh great, thanks, I did not know they had an auto-reinvest option. I do not want to take an income but I want to avoid Irish/EU ETFs due to the higher tax liability.

It is Transferwise that will not accept the transfer from them, as explained here:
https://transferwise.com/help/article/2200390/creating-a-transfer/incompatible-accounts-and-currencies

Cute Hoor · 12-03-2018 7:56pm

Vermelho wrote: »

I have the same issue with handling cash from dividends or trades. My plan had also been to open a Firstrade account to trade US ETFs however I have realized that I cannot open a cash management account with them as I live outside the US. I had thought I could use a Transferwise Borderless US account but they do not accept transfers from brokerages.

Does anyone have any advice on how to open a US domestic bank account from Europe? The only other option is to open a USD account in Europe but this would incur wire charges of $50 a pop!

Why don't you use Interactive Brokers instead, will get over your funding issue.

I don't think any of the brokers will accept Transferwise or CurrencyFair or any other 3rd party outfit, not sure why.

Vermelho · 12-03-2018 8:49pm

Cute Hoor wrote: »

Why don't you use Interactive Brokers instead, will get over your funding issue.

I don't think any of the brokers will accept Transferwise or CurrencyFair or any other 3rd party outfit, not sure why.

I was more concerned about managing dividends and rebalancing than the initial funding, but may just set up to reinvest dividends instead. I do not plan on trading frequently.

Taylor365 · 12-03-2018 8:50pm

Cute Hoor wrote: »

Yes you can, I've just placed a buy order for VOO on TDAmeritrade, no problem.

Mr Hoor, what is your preferred method to deposit funds and withdraw from TD, if you mind my asking?

Cute Hoor · 12-03-2018 11:38pm

Taylor365 wrote: »

Mr Hoor, what is your preferred method to deposit funds and withdraw from TD, if you mind my asking?

It's a long time since I transferred funds to TD and haven't withdrawn. The last time I transferred money to a US broker I set up a US dollar account with BOI, I think I then transferred the money from my BOI Euro account to CurrencyFair, from there to my BOI US account, and from there to the US broker, it was cumbersome, a pain in the butt, and obviously incurred a fair bit in costs.

Vermelho · 12-03-2018 11:49pm

Cute Hoor wrote: »

It's a long time since I transferred funds to TD and haven't withdrawn. The last time I transferred money to a US broker I set up a US dollar account with BOI, I think I then transferred the money from my BOI Euro account to CurrencyFair, from there to my BOI US account, and from there to the US broker, it was cumbersome, a pain in the butt, and obviously incurred a fair bit in costs.

Assume you did it that way though in order to save costs rather than doing a direct transfer with currency conversion from your EUR BOI ac? sounds painful alright but I also would probably just do this as a once off.

Cute Hoor · 12-03-2018 11:56pm

Vermelho wrote: »

Assume you did it that way though in order to save costs rather than doing a direct transfer with currency conversion from your EUR BOI ac? sounds painful alright but I also would probably just do this as a once off.

Yea it was to try to limit fees, hard to imagine that it would be far cheaper to go through an intermediary than direct from one BOI account to another but that was the way it was

Dardania · 13-03-2018 12:07am

Could revolut assist in this day and age? I think one can send from dollar account with them

Cute Hoor · 13-03-2018 12:15am

Dardania wrote: »

Could revolut assist in this day and age? I think one can send from dollar account with them

I suspect the brokers won't deal with Revolut either although I don't know for definite.

Taylor365 · 13-03-2018 12:17am

Cute Hoor wrote: »

It's a long time since I transferred funds to TD and haven't withdrawn. The last time I transferred money to a US broker I set up a US dollar account with BOI, I think I then transferred the money from my BOI Euro account to CurrencyFair, from there to my BOI US account, and from there to the US broker, it was cumbersome, a pain in the butt, and obviously incurred a fair bit in costs.

I saw you mentioned IB in another thread, they sound WAY more approachable regarding depositing funds.

Cute Hoor · 13-03-2018 12:40am

Taylor365 wrote: »

I saw you mentioned IB in another thread, they sound WAY more approachable regarding depositing funds.

Yea they are for sure
With IB you are depositing Euro though, so it's always going to be easier, with the others your account is going to be in dollars which causes the challenges.

Vermelho · 13-03-2018 10:02am

Cute Hoor wrote: »

Yea they are for sure
With IB you are depositing Euro though, so it's always going to be easier, with the others your account is going to be in dollars which causes the challenges.

Sounds good, but what are their costs like? Do they charge a single foreign exchange fee when depositing or is the forex only done at time of trade? Sorry I can’t find details on their website.

Vermelho · 13-03-2018 10:24am

Vermelho wrote: »

Sounds good, but what are their costs like? Do they charge a single foreign exchange fee when depositing or is the forex only done at time of trade? Sorry I can’t find details on their website.

Nevermind, found it!

Dardania · 13-03-2018 10:43am

Write up in todays Times: https://www.irishtimes.com/business/personal-finance/don-t-invest-in-an-etf-until-you-understand-the-tax-1.3421331

valoren · 13-03-2018 1:22pm

There seems to be some perverse human characteristic that likes to make easy things difficult - Warren Buffett.

jive · 13-03-2018 2:13pm

Dardania wrote: »

Write up in todays Times: https://www.irishtimes.com/business/personal-finance/don-t-invest-in-an-etf-until-you-understand-the-tax-1.3421331

should read:

don't invest in an ETF when you understand the tax given the PRIIPS issue

Dardania · 13-03-2018 3:22pm

valoren wrote: »

There seems to be some perverse human characteristic that likes to make easy things difficult - Warren Buffett.

It's a way that natural selection rewards the more patient / risk takers. Darwin would be proud

Taylor365 · 13-03-2018 9:22pm

Cute Hoor wrote: »

Yea they are for sure
With IB you are depositing Euro though, so it's always going to be easier, with the others your account is going to be in dollars which causes the challenges.

On Second thought, they have an inactivity fee....no use for the build and hold strategy.

Cute Hoor · 13-03-2018 11:05pm

Taylor365 wrote: »

On Second thought, they have an inactivity fee....no use for the build and hold strategy.

Oops, wasn't aware of that, pretty significant too if you don't have sufficient equity in your account or aren't trading monthly.

Vermelho · 13-03-2018 11:12pm

Cute Hoor wrote: »

Oops, wasn't aware of that, pretty significant too if you don't have sufficient equity in your account or aren't trading monthly.

I dunno, given the hassle to open a USD account and the cost of keeping one open I think it’s probably cheaper to just pay the monthly inactivity fee.

goob20s · 13-03-2018 11:49pm

Taylor365 wrote: »

On Second thought, they have an inactivity fee....no use for the build and hold strategy.

Have you looked at lynx. I think they're owned by interactive brokers.

Cute Hoor · 14-03-2018 9:04am

Vermelho wrote: »

I dunno, given the hassle to open a USD account and the cost of keeping one open I think it’s probably cheaper to just pay the monthly inactivity fee.

It's a tricky one, and depends on your situation. With TD or Firstrade, once you have them set up and initially funded, there are no further activity/inactivity fees, so your issue is how often are you going to be transferring funds.

The IB inactivity fee at $120 per year is pretty hefty, but wouldn't be if you were a frequent trader, the easiest answer is to get to the $100k quickly and then you don't need to worry about the fees.

You need to work out which suits you best really.

Vermelho · 14-03-2018 4:50pm

Cute Hoor wrote: »

It's a tricky one, and depends on your situation. With TD or Firstrade, once you have them set up and initially funded, there are no further activity/inactivity fees, so your issue is how often are you going to be transferring funds.

The IB inactivity fee at $120 per year is pretty hefty, but wouldn't be if you were a frequent trader, the easiest answer is to get to the $100k quickly and then you don't need to worry about the fees.

You need to work out which suits you best really.

Getting to the $100k suits me best :-) So anyway it turns out I cannot open an account with Firstrade as I live in Portugal, I also cannot seem to open a USD account here and it’s too much hassle to go home to open one (and fees are too high). I think I will just go with IB. After I invest the initial lump sum I would like to invest smaller amounts once or twice a year so I think it should suit. Although their interface makes my heart sink, so complicated and old school!

blorg · 16-03-2018 2:56pm

Vermelho wrote: »

I have the same issue with handling cash from dividends or trades. My plan had also been to open a Firstrade account to trade US ETFs however I have realized that I cannot open a cash management account with them as I live outside the US. I had thought I could use a Transferwise Borderless US account but they do not accept transfers from brokerages.

I don't think there would necessarily be an issue receiving money from a brokerage INTO a TransferWise Borderless account. The restriction TransferWise have regarding brokerage accounts is that you can't fund a transfer from a brokerage account, i.e. if you DON'T have the Borderless account, you can't send through TransferWise from a brokerage account. This is a general rule that they have with regard to funding from third party sources, as a brokerage account transfer appears to come from an account in the name of your brokerage, not you. It does not however apply to Borderless account holders- as they CAN have money paid in from third parties (that's the whole point of the borderless account).
You can't open a US bank account, to the best of my knowledge, without flying there. If you physically go there, I believe it is possible, you might have to ask in more than one place but you should be able to do it, with your Irish address and any small amount of money.

The issue with sending from TransferWise to brokers is the third party thing again, most brokers will reject it because it doesn't appear like it is coming from you but from a third party (Transferwise). HOWEVER I have found one broker, DriveWealth (www.drivewealth.com) who DO, explicitly, allow funding through TransferWise. They have an app and a website, you can buy all the regular US ETFs from Vanguard, Schwab, SPDR, iShares, etc. And anything else on the US market, that is above some minimum (they don't do penny stocks). Downside: these guys are really really small. But they do seem to be FINRA registered and covered by SIPC insurance, so I think they are OK (I hope so). $2.99 per trade, no minimums.

It is not possible to make a transfer from TransferWise INTO Interactive Brokers, and I know that having tried it. It's rejected on the TransferWise end. They have the IB account number blacklisted. But I think IB would reject it anyway as a third party transfer. I asked IB about this, and they were not sure. They did say "third party" would be blocked. So I decided to try, but it was blocked TW end. I THINK TW have this restricted because of that reason, that IB would just reject it.

It's not possible to TW into Schwab either, I asked and they said no. Third party.

Apart from DriveWealth IB I think is a very good option. Particularly if you are funding from EUR as you can send it to them as a SEPA transaction and IB have the cheapest currency conversion you can possibly get as a retail investor, they give you the midmarket rate and charge a tiny, tiny commission on it, literally thousandths of 1%, I think their minimum on it is $2 and that will cover a transaction up to $200,000 sort of level. Yes there is a minimum commission of $10 a month with accounts under $100k but you would easily save that on the currency conversion which is virtually free. They also give you one free wire out per month, something other brokers typically charge $25-50 for.

Any sort of volume and definitely IB I think. Just from the currency conversion point of view. For really small amounts, DriveWealth might be better- but IB will be better currency conversion than TransferWise, you'll lose 0.5% EUR-USD with TransferWise. A lot better than a bank for sure, but IB will be much much cheaper than even that.

Vermelho · 16-03-2018 9:01pm

blorg wrote: »

I don't think there would necessarily be an issue receiving money from a brokerage INTO a TransferWise Borderless account. The restriction TransferWise have regarding brokerage accounts is that you can't fund a transfer from a brokerage account, i.e. if you DON'T have the Borderless account, you can't send through TransferWise from a brokerage account. This is a general rule that they have with regard to funding from third party sources, as a brokerage account transfer appears to come from an account in the name of your brokerage, not you. It does not however apply to Borderless account holders- as they CAN have money paid in from third parties (that's the whole point of the borderless account).
..
..
..

Thanks so much for the long detailed reply, appreciate it!

Linkstr · 06-04-2018 1:22pm

Hey !
I would like to buy some ETFs, unfortunately I do not have the 10k$ required to open an account with IB (actually I have them on my Degiro account, but I don't want to seel everything to buy on the IB account).
So I've opened an account with Firstrade, but I'm really concerned about the transfer and the currency conversion fees... I would like to transfer 4$k soon but I don't want to loose too much money - does anyone have any experience with them ?

Shai · 06-04-2018 1:28pm

AIB to Firstrade wire fees are $25. No idea about conversion fees as I have a dollar account with AIB.

Cute Hoor · 06-04-2018 1:33pm

Linkstr wrote: »

Hey !
I would like to buy some ETFs, unfortunately I do not have the 10k$ required to open an account with IB (actually I have them on my Degiro account, but I don't want to seel everything to buy on the IB account).
So I've opened an account with Firstrade, but I'm really concerned about the transfer and the currency conversion fees... I would like to transfer 4$k soon but I don't want to loose too much money - does anyone have any experience with them ?

There should be no issue with Firstrade (not that I know of anyway), the issue will be with your own bank here, best thing to do is go into them/ring them and find out how much it will cost to transfer the money and what conversion rate will they give you. All the costs will be incurred at this end.

keane2097 · 06-04-2018 1:50pm

With regard to opening the firsttrade account - you are asked for the following:

Foreign Tax ID Number (FTIN)
A Tax ID Number issued by your country of residence. If a FTIN is not available, a reasonable explanation must be provided.

Is this the PPSN in our case?

Shai · 06-04-2018 2:34pm

yup

ronivek · 06-04-2018 3:27pm

I use CurrencyFair to convert my euros to dollars and also to perform the wire. Unfortunately there’s a $25 fee charged by Bank of America during the wire but you get 3 free transfers from CurrencyFair when you sign up.

Linkstr wrote: »

Hey !
I would like to buy some ETFs, unfortunately I do not have the 10k$ required to open an account with IB (actually I have them on my Degiro account, but I don't want to seel everything to buy on the IB account).
So I've opened an account with Firstrade, but I'm really concerned about the transfer and the currency conversion fees... I would like to transfer 4$k soon but I don't want to loose too much money - does anyone have any experience with them ?

jive · 16-04-2018 10:01am

Can anyone breakdown what the best route into US ETFs is now that we've been screwed with PRIIPS? Has anyone successfully transferred over to a US broker (who is living in Ireland at the moment)?

Seems it will be much more expensive with conversion fees etc. but still a preferable alternative to being exposed to the deemed disposal rule.

Cute Hoor · 16-04-2018 12:10pm

jive wrote: »

Can anyone breakdown what the best route into US ETFs is now that we've been screwed with PRIIPS? Has anyone successfully transferred over to a US broker (who is living in Ireland at the moment)?

Seems it will be much more expensive with conversion fees etc. but still a preferable alternative to being exposed to the deemed disposal rule.

The choices are pretty simple, but require work on your part.

If you are investing over $100k, then Interactive Brokers is the way to go imo, from an ease of funding and transaction fee point of view. If your Interactive Brokers account is less than $100k then there are monthly fees. See here.
https://www.interactivebrokers.com/en/index.php?f=4969
Their trading commissions are minimal. See here.
https://www.interactivebrokers.com/en/index.php?f=1590&p=stocks1
Pros: You fund your account in Euros, so no bank charges on either side and transfers done quickly, very good rates on exchange rates if you are moving your euros to another currency.
Cons: Monthly fees (?) and the website not the most user friendly.

If Interactive Brokers isn't the one for you, then it looks like Firstrade ($2.95 per trade) or Ameritrade ($6.95 per trade), both of which take Irish clients (unless the rules have changed recently). You will have to fund either one in dollars. I cannot say what the costs of the Bank transfer (exchange rate and commission) will be but I would suggest that you speak to your bank and find out exactly what you will be charged (both exchange rate and commission). Obviously if you are transferring $50 per month then it will be totally uneconomical, bank exchange rates and fees will absolutely murder you. However if you are doing a large one-off transfer then the bank exchange rates and fees might not be that prohibitive.
Pros: Ease of use
Cons: Transferring to and from your account, and the currency risk.

Nobody can tell you definitively what to do (imo), you need to work it out for yourself depending on your own particular circumstances and future plans.

All 3 brokers offer some commission free ETF's, but the commissions involved for all 3 are pretty low anyway.

keane2097 · 16-04-2018 12:28pm

I wonder if it might be possible to fund the accounts through Revolut to keep the costs down a bit.

Skelet0n · 05-05-2018 10:55am

Is there a consensus on what the best course of action is?

Is there a chance of the 8 year tax being changed before it comes due?

Opening a brokerage account in the US seems to be a pain for regular deposits in order to take advantage of cost-averaging with the currency conversion and wire fees.

Frogdog · 10-05-2018 4:35pm

Skelet0n wrote: »

Is there a consensus on what the best course of action is?

Is there a chance of the 8 year tax being changed before it comes due?

1. No
2. Who knows!

Diarmuid · 15-05-2018 7:43pm

A quick FYI, I was able to purchase VT (Vanguard ETF) on Keytrade today, despite not having a KID. You have to do a little questionaire and acknowledge that you understand that the KPI is not available but it worked. I'll be moving money out of DeGiro. The big downside is Belgiums crazy "speculation tax" but for a buy and hold situation it's ot an issue

Here's the exact wording:
The Key Information Document is currently not available. We do take all necessary measures to get this document from the manufacturer of this instrument. If you would like to place your order without this document, please click here

TiGeR KiNgS · 15-05-2018 9:16pm

Diarmuid wrote: »

A quick FYI, I was able to purchase VT (Vanguard ETF) on Keytrade today, despite not having a KID. You have to do a little questionaire and acknowledge that you understand that the KPI is not available but it worked. I'll be moving money out of DeGiro. The big downside is Belgiums crazy "speculation tax" but for a buy and hold situation it's ot an issue

Here's the exact wording:
The Key Information Document is currently not available. We do take all necessary measures to get this document from the manufacturer of this instrument. If you would like to place your order without this document, please click here

If its that easy to avoid, DeGiro should have this up and running shortly (or they might take ages because there's little or no money for brokers in ETFs).

Diarmuid · 15-05-2018 9:50pm

TiGeR KiNgS wrote: »

If its that easy to avoid, DeGiro should have this up and running shortly (or they might take ages because there's little or no money for brokers in ETFs).

Apparently it depends on how the host country implemented the directive. So no guarantee it will ever be allowed in DeGiro

Skelet0n · 16-05-2018 11:37am

Diarmuid wrote: »

A quick FYI, I was able to purchase VT (Vanguard ETF) on Keytrade today, despite not having a KID. You have to do a little questionaire and acknowledge that you understand that the KPI is not available but it worked. I'll be moving money out of DeGiro. The big downside is Belgiums crazy "speculation tax" but for a buy and hold situation it's ot an issue

Here's the exact wording:
The Key Information Document is currently not available. We do take all necessary measures to get this document from the manufacturer of this instrument. If you would like to place your order without this document, please click here

How's your experience been with keytrade? Fees, customer service etc?

Diarmuid · 16-05-2018 5:05pm

Skelet0n wrote: »

How's your experience been with keytrade? Fees, customer service etc?

Haven't had much interaction with them wrt, customer service but in general it's been issue free. Fees are good for buy and hold. I'm not a regular trader so the transaction costs are not significant for me. I opened the account years ago when there wasn't many alternatives

cooperguy · 17-05-2018 11:29pm

Diarmuid wrote: »

A quick FYI, I was able to purchase VT (Vanguard ETF) on Keytrade today, despite not having a KID. You have to do a little questionaire and acknowledge that you understand that the KPI is not available but it worked. I'll be moving money out of DeGiro. The big downside is Belgiums crazy "speculation tax" but for a buy and hold situation it's ot an issue

Here's the exact wording:
The Key Information Document is currently not available. We do take all necessary measures to get this document from the manufacturer of this instrument. If you would like to place your order without this document, please click here

It will be interesting to see if DeGiro implement the tick box work around for non-KID ETFs that would be brilliant! That speculation tax shouldnt affect many people though right? You have to buy and sell within 6 months, probably not the thing you would be doing with ETFs.

I haven't had much much experience with Key Trade. Do they have a similar setup/fees to Degiro? Any particular disadvantages?

Skelet0n · 11-06-2018 4:49pm

Diarmuid wrote: »

A quick FYI, I was able to purchase VT (Vanguard ETF) on Keytrade today, despite not having a KID. You have to do a little questionaire and acknowledge that you understand that the KPI is not available but it worked. I'll be moving money out of DeGiro. The big downside is Belgiums crazy "speculation tax" but for a buy and hold situation it's ot an issue

Here's the exact wording:
The Key Information Document is currently not available. We do take all necessary measures to get this document from the manufacturer of this instrument. If you would like to place your order without this document, please click here

How did you get an account?
I sent off the relevant documents and received “Thank you for your email.

To open an account at Keytrade it is required to have a Belgian ID and a official address in Belgium.

Thank you for your understanding.

Kind Regards,

Customer Service Keytrade Bank“

Diarmuid · 11-06-2018 5:24pm

Skelet0n wrote: »

How did you get an account?

I opened it back in 2008, possibly earlier.

Skelet0n · 13-06-2018 11:28am

Anyone have experience with internaxx or lynx?

They both appear to offer US ETFs and accept Irish clients.

An_Toirpin · 13-06-2018 10:30pm

Skelet0n wrote: »

Anyone have experience with internaxx or lynx?

They both appear to offer US ETFs and accept Irish clients.

Are these European brokers?

US ETFs no longer purchasable in Europe

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