Hi, American dual citizen of Taiwan and USA here.
I hear Taiwan has no capital gains tax. So can I buy say google stock or an US etf or a US mutual fund in Taiwan and then not have to pay tax on it?I will use a Taiwan bank account to buy it.
I hear the limit is 400,000 US dollars that you have in foreign accounts before you must pay tax on it.
I am nowhere near 400,000 US$ in assets in Taiwan.
What would you guys advise?
Don’t try it. As a U.S. citizen, you’re required to file and pay U.S. taxes no matter where you or your investments are.
You probably heard this from a european or asian. Being an american you always owe taxes. If your foreign accounts total over 10k combined you must report all accounts worldwide. Money left in a Taiwan corp for investment is taxed at 20-25% and you must report ingoing and outgoing transactions to the IRS. Offshore corp is subject to additional GILTI tax.
Taiwan has capital gain tax after a certain amount, but there’s a large deduction.
It’s better to just invest from the US since their investment tools are so much better
US requires you to report all earnings regardless of where you earn them.
Ok well that stinks. Now I have been told the following by at least three banks from different chains:
Taiwan bank: You are a US citizen. We can’t let you buy mutual funds sir. Taiwanese dual citizens also can’t buy mutual funds now.
And then fidelity US: you are a US citizen living abroad so you can’t invest.
So how am I supposed to invest even if I will pay taxes? Give up on a Taiwan bank and try all the different Scott trades Robinhood app or interactive brokers?
I am just looking to invest in index funds for retirement and hold onto until I am old. Be responsible so I don’t have to leech off the kids type of thing. I will never be rich.
Yes. Interactive Brokers and Charles Schwab will both set up international investing accounts for American expats.
Are you staying in Taiwan long term?
The investment tools here are crap and fees are super high when buying US mutual funds or etfs. And it’s complicated to transfer stocks in kind (no cash out) to back home. Robinhood does not have mutual funds.
Fidelity has an international site that maybe you can use
Personally I only buy ETFs and not mutual funds because I need the liquidity for when I decide to yolo into a stock
You can use VTI instead of VTSAX etc
Yes I will be in Taiwan for 25 more years or so. Does this fact change your advice?
Fidelity requires a U.S. address to set up investment accounts.
Even for www.fidelityinternational.com ?
If you’re dual I’d just renounce if you’re not going back to the US anytime soon
American citizens are subject to world wide taxes. American taxes are based on citizenship and not residency.
Only if you maintain an American address. Most brokers won’t sell U.S. mutual funds to American expats. ETFs, of course, are another matter.
The only way to avoid American taxes indefinitely is to renounce your American citizenship and passport.
Ok then it’s a worst of both worlds type of deal, hehe. Make less money than the US and still pay taxes.
Do you work in Taiwan? Unless you make over US$105,000, it’s tax free as far as the IRS is concerned. And as long as you only take long term capital gains and keep dividends to a minimum, you shouldn’t owe much, if anything, in taxes.
Yes I make way less than 105,000 US$ here in Taiwan. Way way less.
So i should just invest as if I don’t live in Taiwan. No legal tax breaks for living here.
The $105,000 Foreign Earned Income Exclusion is exactly that…a legal tax break. And as long as your long term capital gains are under $50,000 per year, you shouldn’t owe any taxes on that either.
Thank you very much.
Just get a virtual address in the US for like $10 a month. I use that with Fidelity and no issues. Actually for all my US investment accounts I use the virtual address and don’t ever list a foreign address as they may suspend the account with no notice.
I use my mom’s address to save on fees