This is for non-US persons right? Fidelity doesn’t allow non-US persons to register.
Another pleasant Fidelity surprise: You can call and have margin requirements lowered from the published 30% minimum. They did an interview and credit check, but agreed to bump it down to 20%.
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Did your margin rate decrease recently? I noticed mine got lowered automatically back to the previously negotiated rate, even after the fed interest rate bumps. Not sure if it’s related to an email I sent. So now the margin rate at fidelity is much better than IBKR.
They allow non-resident aliens to keep an account w/ W8-BEN, but yeah now they’re not accepting new account openings. You can open an account if you temporarily have a work visa in the US.
Nope, jumped 0.5%.
Has anyone done the math on investing in the US stock market via a country that has a tax treaty with Taiwan, thus lowering the 30% dividend withholding rate? For example Canada has a tax treaty with Taiwan.
I tried investing a small amount via a Canadian brokerage (as a non-resident Canadian, but tax resident of Taiwan) into US funds (i.e. VFV.TO Vanguard S&P 500). I checked the latest dividends issued, and they withheld only 15% for non-resident taxes. I need to dig into it a bit more to see if the US side also withheld dividend taxes, but otherwise this seems to be better than the 30% default withholding rate for US dividends if you invest directly into US funds. There’s both hedged and unhedged versions of this ETF in Canada.
i use Irish domiciled ETFs to lower the dividend withholding, but it doesnt impact any TW taxes. I pay less to the USA, but no change on TW side.
Then the brokerage didn’t deduct the right amount of taxes IMHO. They should deduct 30% unless you are a tax resident of Canada (and not of Taiwan). The location of the brokerage shouldn’t matter - only your tax residency.
Did you fill out a W-8BEN when opening the account? What did you write as your country of residence?
Yes filled out both W8-BEN and NR301 with tax residency specified as Taiwan on both forms
I’m not quite sure how it works since I read conflicting things. The Taiwan-Canada tax treaty means dividends are withheld at 15% for Taiwan residents who invest in Canadian funds. And Canadian funds like VFO.TO are wrappers around US ETFs. I guess I’ll see what other forms I’m issued at end of the year, but it doesn’t look like they’re withholding any US taxes other than the 15%.
If you are a Canadian resident, you can get VFO.TO dividend withholding down to 0% due to US-Canada tax treaty. I think it’s 15% in other cases or if there’s a tax treaty, or 30% if no tax treaty.
If it works like this, then Canadian ETFs that wrap around US ETFs seem better for Canadian non-residents than Irish domiciled funds, since there’s no trade commissions using these Canadian funds and it feels safer to keep investments in your country of citizenship.
Ah, from your previous posting I understood that you’re investing into US-based funds:
If you’re not investing into US-based funds, but into Canadian ones, then everything should be fine.
That sounds reasonable. For EU citizens on the other hand, the Irish funds seem like the better choice because the Canadian ones can cause tax issues if one lives in Europe (or at least some European countries).
What about HK funds that invest into the US stock market? That’s something I have to look into next. HKD is pegged to USD 1:1, and they have local HKD funds that mirror US ETFs, so you can get dividend withholding down to 0%, since HK has no dividend taxes.
I would consider them to carry a considerable political risk (compared to the Canadian ones) if the tensions between the US and China worsen. YMMV.
If I remember correctly, this is also possible with the synthetic (i.e. swap-based) funds in Ireland. But those won’t hold actual stocks so there is some additional risk according to my understanding (the same might be true for the HK-based ones as well).
Aren’t you a U.S. citizen? If you’re filing U.S. taxes, is the dividend withholding rate really that important?
Not anymore
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Oh, wow. Say no more… 
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Also, you’d in big trouble if - as a US citizen - you actually buy certain EU funds (you could be liable for millions of damages should the fund find out!). The same might be true for the Canadian ones. The reason is that the US doesn’t want their citizens to buy those funds to circumvent taxation, so the funds have to agree that they won’t sell to US citizens…
FATCA has made everything such a hassle. Sigh…
I’m still not positive on this, it seems like a loophole they forgot about. VFV.TO is a wrapper around the US fund so the withholding should match the US fund and most financial sites I read said this.
The Irish domiciled funds are not wrappers, they’re separately managed funds that mirror US ETFs so they can have their own withholding rates. HK ones are separately managed funds too, so they don’t have the 30% dividend withholding rates.
I will find out in a year when they start sending tax forms. I only invested a small amount to test with for now.
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Yes, that seems to be the case: (Note that this is information on a website of a company marketing synthetic funds, so better take some of the information there with a bit of caution):
Synthetic replication for US equity indices
Among the largest and longest-running synthetic ETFs are those tracking major US equity benchmarks such as the S&P 500 and MSCI USA indices. While a physically replicated ETF, domiciled in one of the European jurisdictions that has a tax treaty with the US, is subject to reduced withholding taxes on the dividends it receives, a synthetic ETF can receive the gross return of the index, I.E., with 0% dividend withholding tax. As a result, a synthetic ETF domiciled in Ireland can benefit from an additional 15% of dividend values, compared to a physically replicated ETF also domiciled in Ireland.
The basis for this structural advantage is embedded within US legislation. Section 871(m) of the US HIRE Act explicitly excludes swaps written on indices with deep and liquid futures markets from the requirement to pay dividend withholding taxes. This enables a US bank writing the swap to return the equivalent of the gross return of the index to an ETF domiciled outside the US.
Synthetic funds are a bit above my risk tolerance level since you don’t own the actual stocks. They remind me of the FTX synthetic/tokenized stocks you could buy with crypto.
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Are you sure the HK funds won’t fall into the same category? Otherwise, I don’t know how they could have 0% taxes on dividends of US stocks.
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