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30% Dividend withholding tax on US etf/funds/stocks

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  1. #1

    30% Dividend withholding tax on US etf/funds/stocks

    30% of the dividends from investing in the US ETF, funds, stocks would be deducted for non-US residents. That's a lot!

    1. So, why do non-US citizens still invest in these US products? There must be a reason. Could someone please explain? For people near retirement age and want dividends as regular income, is it better to not invest in US ETFs to avoid the 30% tax?

    2. If we reinvest the dividends, there wont be 30% tax, right?

    3. Also, this 30% tax does not apply to bond interest, right?

    Thank you


  2. #2

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    - Growth (no dividends)
    - 30% on dividends.. What you do with it is after the fact it has been taxed.
    - Depends some bonds etfs are tax free or partially tax free and some are not

    watashihk likes this.

  3. #3

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    “So, why do non-US citizens still invest in these US products?”

    There are tax treaties reducing the 30% to 10 or 15%. And this deduction reduces the tax liability in your country by the same amount.

    It’s just that HK has no tax treaty with US and
    there is no tax on dividends to offset the amount paid to Uncle Sam


  4. #4

    Thanks shri. So, most people buy US products for growth in stock prices... if I sell the US etf, will that trigger the 30% tax?

    And, if I focus on getting dividends as regular income, should I still buy US etf or other things?

    Last edited by watashihk; 05-10-2021 at 11:01 PM. Reason: add more info

  5. #5

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    There's no tax on selling US listed stock either on the US side or HK. All of your capital gains go into your pocket.

    If you want regular income from US stocks you can just buy growth stocks and sell small amounts out. It's basically the same thing, just a different and more tax efficient way of realising your gains.

    Most balanced portfolios will have a significant US component because the US is still the driver and beneficiary of most of the economic growth in the world.

    watashihk, shri and Mrs. Jones like this.

  6. #6

    Good strategy. Thanks!


  7. #7

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    One thing should be made clear here.

    We are talking about individual US listed companies, and ETFs etc listed / traded in the US having a 30% tax on dividends.

    You can for example have a large US component in a Irish / UK traded ETF and that part will only be taxed at 15%.

    Last edited by shri; 06-10-2021 at 05:02 AM.

  8. #8

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    Quote Originally Posted by aw451:
    There's no tax on selling US listed stock either on the US side or HK. All of your capital gains go into your pocket.
    I'm going to assume the OP isn't a US citizen or otherwise subject to US taxes (besides 15 to 30% WHT), but capital gains are definitely taxed if you're a US citizen, a US green card holder, or a few other kinds of people that I don't really know about as I'm a US citizen and I don't know much about other statuses.

    Anyway, you made good points, so thanks for that.

  9. #9

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    Quote Originally Posted by Morrison:
    There are tax treaties reducing the 30% to 10 or 15%.
    So if Irish domiciled ETFs are only subject to 15% US WHT for dividends, which US related ETFs are only subject to 10% US WHT for dividends?

    For those on this forum that want to buy Irish-domiciled US related ETFs, do you use IB or which brokerage do you buy them through?

  10. #10

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    Synthetic ETFs are currently 0% US WHT.

    LoganH and pin like this.

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