ETF Investing for Foreign Investors
US-Listed vs Ireland-Domiciled: Which is better for you?
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Ireland ETFs
15% withholding, no estate tax
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US ETFs
30% withholding, estate tax
40%
Estate Tax
On US assets over $60K
UCITS
EU Compliant
PRIIPs regulation safe
For most non-US investors, Ireland-domiciled ETFs offer better tax efficiency and no US estate tax exposure
Why ETF Domicile Matters
SPY (US-domiciled) and CSPX (Ireland-domiciled) both track the S&P 500. Same index, dramatically different tax treatment for non-US investors.
Ireland ETF Advantages
- 15% US withholding (Ireland treaty)
- No US estate tax exposure
- Often 0% to your country
- PRIIPs/UCITS compliant for EU
- USD, EUR, GBP versions
US ETF Drawbacks
- 30% dividend withholding (or treaty)
- 40% estate tax over $60K
- PRIIPs blocks EU investors
- USD only
- Lower expense ratios though
US vs Ireland ETFs: Side-by-Side
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US-Listed ETFs
SPY, VOO, VTI, QQQ
- x 30% dividend withholding (15% treaty)
- x US estate tax (40% over $60K)
- + Lowest expense ratios (0.03%)
- + Best liquidity, tightest spreads
- ~ USD denominated only
- x PRIIPs blocks EU retail
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Ireland-Domiciled ETFs
CSPX, VUSA, IWDA, EQQQ
- + 15% US withholding (Ireland treaty)
- + No US estate tax exposure
- ~ Slightly higher expense (0.07%)
- + Good liquidity on LSE/Xetra
- + USD, EUR, GBP versions
- + PRIIPs/UCITS compliant
How the Tax Flow Works
US ETF Dividend Flow (Direct)
$100
US Dividend
->
SPY
Passthrough
->
-$15-30
Withholding
->
$70-85
You Receive
Ireland ETF Dividend Flow (Better)
$100
US Dividend
->
CSPX
15% Treaty
->
$85
ETF Receives
->
$85*
You Receive
*Many countries have 0% withholding treaties with Ireland
The US Estate Tax Problem
$500K in US ETFs could mean $176K estate tax bill (40% of $440K over $60K exemption)
US-situs assets held by non-residents are subject to US estate tax at rates up to 40%, with only a $60,000 exemption. Ireland-domiciled ETFs avoid this entirely.
Countries WITH US Estate Treaty
- Australia, Austria, Denmark
- Finland, France, Germany
- Greece, Ireland, Italy, Japan
- Netherlands, Norway, Switzerland, UK
No Treaty = Full Exposure
- China, India, Brazil, Russia
- Most of Asia, Latin America
- Singapore, Hong Kong, UAE
- Use Ireland ETFs to avoid
Popular ETF Equivalents Table
| Index | US ETF | Expense | Ireland ETF | Expense |
|---|---|---|---|---|
| S&P 500 | SPY / VOO | 0.03% | CSPX / VUAA | 0.07% |
| Total US Market | VTI | 0.03% | VUSA / CSPX | 0.07% |
| NASDAQ 100 | QQQ | 0.20% | EQQQ / CNDX | 0.33% |
| MSCI World | VT / URTH | 0.07% | IWDA / SWDA | 0.20% |
| Emerging Markets | VWO / EEM | 0.08% | IEMG / EIMI | 0.18% |
| US Treasury | TLT / IEF | 0.15% | IDTL / DTLE | 0.07% |
| Gold | GLD / IAU | 0.40% | IGLN / SGLD | 0.12% |
Acc = Accumulating (reinvests dividends). Dist = Distributing (pays out). Acc often more tax-efficient.
When US ETFs Might Make Sense
Consider US ETFs If:
- You're a US tax resident
- Your country has better US treaty
- You need maximum liquidity
- You have US estate tax treaty
- Expense ratios matter greatly
- You need US options markets
Stick with Ireland If:
- Estate tax is a concern
- You're an EU resident (PRIIPs)
- Want multiple currency options
- Prefer accumulating funds
- No US estate tax treaty
How to Get Started with Ireland ETFs
Step-by-Step
- Choose broker (Interactive Brokers, Saxo, DEGIRO)
- Search for "[index] UCITS ETF"
- Check trading venue (LSE, Euronext, Xetra)
- Choose currency (USD, EUR, GBP)
- Decide Acc vs Dist
- Complete W-8BEN (still required)
Recommended Brokers
- Interactive Brokers - best overall
- Saxo Bank - European option
- DEGIRO - low cost Europe
- Swissquote - Swiss-based
Country-Specific Considerations
UK Residents
- 0% withholding treaty with Ireland
- Reporting funds = capital gains tax
- Ireland ETFs ideal
EU Residents
- UCITS compliance required
- US ETFs blocked (PRIIPs)
- Ireland ETFs standard choice
Singapore/Hong Kong
- No capital gains tax locally
- US estate tax major concern
- No US estate treaty - use Ireland
Australia
- Complex CFC/attribution rules
- ASX-listed may be simpler
- Consult Australian tax advisor