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Irish ETF Taxes: In HK / UK

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  1. #1

    Irish ETF Taxes: In HK / UK

    I'm a HK citizen currently residing in HK. I initially thought of investing in US ETFs, but upon research found that investing in their corresponding Ireland ETFs will bring the dividend tax to 15%.

    I read that Ireland domiciled ETFs have "deemed disposal", where tax (41% of the profit) needs to be paid every 8 years, which can then be used as credit against the final tax.

    I'm still a bit muddy on this whole tax issue. So hoping people here can confirm/clarify (sorry these are amateur questions!):

    Let's assume I have recently purchased an Ireland domiciled ETF

    1) Before the 8 years is up and if residing in HK, I only need to pay dividend tax of 15% Correct? Would I be taxed again if I choose to reinvest the dividend?
    2) On the 8th year and residing in HK, in addition to dividend tax, I will also need to pay the 41% tax. Correct?
    3) How will my tax situation change if I move to UK before or after the 8 years? I read from an older post that the best solution was to sell the ETF before moving to UK. What if I have a permanent HK address? Would that make a difference?

    Thanks so much!

  2. #2

    Join Date
    Oct 2006
    Hong Kong

    Following. Will reply later.

  3. #3

    Join Date
    Dec 2002

    I will also need to pay the 41% tax
    Where did you read this? And have you researched how it applies to someone who is not resident or tax resident or domiciled?

    I suspect pin will have an answer for you..
    Mapleleafgirl likes this.

  4. #4

    Join Date
    Mar 2010

    “What if I have a permanent HK address? Would that make a difference?”

    I think you should start at square one.
    Read a little bit about what defines tax residency.

    Mapleleafgirl and shri like this.

  5. #5

    Join Date
    May 2009

    Important question to receive an answer is where are you a citizen? And does that country have Global Tax?

    Without the above (could change some answers)

    1) Yes you pay 15% withholding tax but it will just be withheld at source/broker so you don't have to do anything. No you can do anything you want with the dividend (if you are going to reinvest it in the same ETF, look at accumulating ETF, which does saves you additional transactions)
    2) Never heard of this. In HK there is no Dividend Tax or Capital Gain Tax so answer is NO. But I'm curious where you get that info from...
    3) I leave that to the Brits who understand the Tax situation better. But it has to do with the Capital Gain Tax that the UK will charge you.(A lot of people sell all their assets before moving to the UK and once they move the money they will buy the assets back, just to avoid paying CGT on the appreciation of the assets in years before moving to the UK)

    Mapleleafgirl likes this.

  6. #6

    My bad! My initial research only said "41% of the profit" without specifying whether that's applicable to everyone or particular individuals.
    Further research just now states that the 41% is applicable to Irish investors. But I still don't know if non-Irish investor (like me) will be taxed on the profit from Ireland? Even though HK doesn't have capital gain tax....

  7. #7

    Thanks in advance, pin! Looking forward to your response

  8. #8

    Join Date
    Aug 2012
    Location Location

    1) the 15% tax on dividends is withheld at source.

    2)Deemed Disposal is a tax on ETFs that applies to residents of Ireland.

    3) If resident in the UK then you pay CGT on your worldwide capital gains. You pay them in the tax year that you realise those gains. If you realise those gains before becoming UK tax resident then you don't need to pay CGT to the UK. You need to be non resident for a minimum of 5 years though. And any property investments are still liable to CGT.

    pin likes this.

  9. #9

    Thanks for your input!

    1) Right . Good to know. Will look into accumulating ETFS.
    2) My bad. When I was looking into this before posting, the sources I had weren't specific on whether this is applicable to every investor or just Irish investors.
    3) Ahh I see. I guess there's really no better solution other than sell and repurchase

  10. #10

    Join Date
    Jul 2018

    Make sure when you re-buy your ETFs to do it within an ISA Stocks and Shares account. You have a limit of £20,000 per tax year and It keeps your gains in a tax free wrapper.

    Mapleleafgirl likes this.

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