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Following Passive Investing
Comments
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What do you want to do with the dividend income, i.e. withdraw/spend it or reinvest it? Are you using a tax wrapper such as a S&S ISA?
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Would only buying on the London Stock Exchange fulfil both of these requirements?
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I have noticed Irelands funds being mentioned before. Are they attractive because, at the end of the year, you will pay less tax?
Do you have to track such tax data? I would have thought that the platform would send you an end of year tax document, just as banks do.
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Could you please expand on "suitable domicile".
From another reply, I saw that there would be different tax implications.
Are there any other issues?
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There are plenty of securities trading on LSE in other currencies. It is also not necessary for an ETF to be UK-reporting for it to be listed on the LSE. So you will need to refer to the information provided by the fund house running the ETF. Most will list this on a webpage for the fund.
Ireland generally has better double taxation treaties than other domiciles (e.g. Luxembourg). You will need to track the tax data as often platforms do not track Excess Reportable Income, which applies to offshore funds.
Taxation is the main one. But an offshore fund is also bound by the laws of its domicile, so there are geopolitical considerations too. I have not seen many major ETFs domiciled in countries other than Ireland and Luxembourg, and I wouldn't consider there to be any red flags politically with either of those. But on a tax position see above (depends what the ETF invests in of course).
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Ireland generally has better double taxation treaties than other domiciles (e.g. Luxembourg). You will need to track the tax data as often platforms do not track Excess Reportable Income, which applies to offshore funds.
After searching what ERI meant, I thought "so you have to go to a lot of effort to find out how much you have to pay the taxman for something you didn't get".
Is it feasible to have a portfolio that doesn't include funds with ERI?
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ERI only applies to offshore securities, so all ETFs and some funds. If you are just holding UK domiciled OEICs, then it is not something you need to worry about.
You do get the ERI, it is just income that is included in the share price, not paid out as a dividend. By law UK OEICs have to pay out all of their income (or for Acc units, account for it in a notional dividend). It is often published well after the end of the relevant tax year, hence it is not really feasible for platforms to account for it.
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Vanguard publishes its dividends well before they are paid. Their numbers do not always tally precisely with the actual payment though. Vanguard also publishes ERI before the end of the tax year for the ETFs that I have held. I have read posts saying that Amundi fails to do that. You avoid these problems by using a tax shelter.
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Withholding tax is withheld by the country from which it comes. You do not have to pay it because it has already been paid. The fund manager may be able to claim some of that tax back within the fund. For direct investments, you can allow withholding tax against UK dividend tax, but you cannot do that for collective investments.
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Right now just investing for future, not intending to use/spend for at least 8 yrs, least till have learned more about investing on route hope to learn if reinvesting or tranfering to different platforms, stocks is useful/way to go
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