Investing in Taiwan with Interactive brokers and taxes

I did some research and here are the best US ETFs I found so far for a non-American based in Taiwan. They are all Irish domiciled and have 0% US estate tax. I invest through IB and pay $4 per buy order. Transfer from HSBC TW to HSBC US via global transfer for free, then do free ACH transfer to IB.

Terms:

Accumulating - automatically re-invest dividends back into the ETF. You still pay 15% dividend withholding taxes. But you don’t have to pay transaction fees for re-invested dividends

Synthetic - uses swaps method with large banks which has more risk, but 0% dividend withholding tax

SPY500 ETFs:
CSPX - Accumulating, 15% dividend tax, most trading volume
SPXS - Synthetic, 0% dividend tax, some risk due to swaps

Other SPY500 options:
VUAA - Accumulating, 15% dividend tax, from Vanguard but newer/lower volume
VUSD - Distributes dividends, 15% dividend tax

World ETF (similar to VT):
VWRA - Accumulating, 15% dividend tax

For tech sector (similar to QQQ):
IUIT - Accumulating, 15% dividend tax

Emerging:
EIMI

Personally I’ll go mix of CSPX, SPXS, VWRA, and IUIT. SPXS has the best performance for SPY500 ETFs due to no dividend withholding tax

See screenshot for adjusted returns with dividends re-investment included. SPXS beats SPY slightly after re-investment of dividends, and has 0% tax for Taiwan residents

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Great summary!

Just fyi, depending on your transaction size the variable fee structure might be cheaper. You can change it in user settings.

Buying this one every month for my kids.

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Did anyone confirm if this also applies for foreign brokers/securities? With Taiwanese tax consultant or CPAs.

Because, no capital gains tax for stocks is usually the rule in Asian countries. But only when you use the local stock market. When you touch foreign stocks, usually different rules apply, for example, the progressive income tax or something worse.

Won’t capital gains with foreign brokers fall under foreign-sourced income with the 6.7 mil NTD AMT rule? Or possibly normal progressive income tax, because you after all click “buy” and “sell” in taiwan, so not really foreign income.

Similar discussions:

Imo, the rule has been misinterpreted optimistically. And people got away with it, because of ingrained tax evasion culture. The guy on my first reddit link actually asked the tax bureau and consultants, and the responses were basically they don’t care.

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With IBKR, do they automatically report any tax related data to the Taiwan government if you sign up with your Taiwan details? Or do you have to manually supply the data to the Taiwan tax authorities come tax season? I already have an account with IBKR, just never funded it

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To the best of my knowledge the reporting is on you.

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Does IBKR allow you to print a statement of your investments in Chinese?

Still contemplating using it for my main investment account, and would be great if I can get statements in Chinese for when I need to use it as proof of funds when applying for credit cards

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That’s robbery…$25 and 0.5% per trade is insane.

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I found Taiwanese banks were not interested in any proof of funds that were not in Taiwan. Like immediately discounted and a denial text message sent.

Fubon accepted my credit card application despite only showing my UK investment account holdings so idk

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That’s good, the banks I used all called and said no dice.

They do have a Chinese interface (possibly simplified), so I assume that you can also get your reports in Chinese.

In my experience the tax authorities seem to be happy with English documentation.

You already have several cards, and a local bank account, so no need for IB statements. they have enough materials to decide if you are credit worthy.
The cost savings of trading with IB is the main reason to switch, if you already have a good deal with your current broker then no need to over complicate life.

IBKR does not report anything to the Taiwan government. If anything needs reporting, you would have to do that yourself. I am not sure what would need reporting unless you go over 6 million income.

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What kind of fees do you pay for buying and then holding US ETFs?

Interactive Brokers commissions

I don’t recall ever being charged for holding.

If you are not a US citizen, make sure you purchase IE domiciled UCITS, not US domiciled ETFs. Otherwise you get hit hard on dividend withholding taxes and estate taxes.

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Thanks for the advice!

When you transferred money into your IBKR account, other than the fees charged by the Taiwanese bank, did IBKR’s receiving bank in the US (Citi) charge any fees for inward remittance?

Yes, and it was quite steep. Something like US$20. Not sure if it was the receiving bank, could have been the intermediary bank.

I usually wire in batches every quarter or half year to minimize banking fees.

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For future reference, I was charged $4 USD on a $4751 USD transaction. Not sure if that’s a fixed charge or a percentage, probably fixed.

Yes, that’s fixed. You can change it to tiered commission under settings, but in many cases fixed makes more sense.

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