Unless you’d like to pay taxes for your imaginary portfolio, you’re in the wrong thread 
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Hello,
I want to ask if anyone knows if the dividents and the capital gains from the UCITS index funds are taxed differently? Let’s say VUSA/VUSD. The fund is domiciled in Ireland, but contains US based assets. In this case what’s the tax - 15% dividend taxes from Ireland to USA or taxes from me to USA? Or from me to Ireland? And is it 15% for both capital gains and dividends?
Provided that my country has an avoiding-double-taxation treaty with USA should I concider that all taxes from my profit (both capital gains in case of sale and regular dividends) will be paid to USA (or Ireland, because I don’t know whom I pay) in advance and I’ll receive the net profit without having to pay again in my country? (Because for us both capital gain and dividend taxes are lower than 15%)
Can someone please help, who taxes us - USA ot Ireland…
Thank You
Witholding Tax is already priced in dividend paid for the ETF. So there is no additional witholding tax towards investor.
No. With an ETF there is no provision for reducing dividend and capital gains tax liabilities in your own country because of taxes withheld by the ETF for US tax. If VUSA pays a dividend of $100, after deduction of the 15% US withholding tax, you still have a local tax liability for $100 dividend. So unfortunately ETF dividends of VUSA/VUSD do suffer from double taxation. First a 15% bite from the US, then whatever % your country charges on dividends.
Capital gains taxes are always a local matter, to be paid in your country of tax residence.
Hmm it depends on dividend tax in local countries. If local tax is 12.5% and you paid witholding tax at rate 15% to country with which you have dual taxation treaty. There should be no further tax implications…
But if dividend tax is 20% in local country, then you have to cover difference 20-15 = 5%…
That works with company share dividend income, but not with ETF dividend income. If Apple pays $100, US takes $15. I pay UK tax of 32.5%, but can take the $15 as a credit against the $32.5, so my total tax is $32.5. However, if VUSA pays a $100 dividend I am expected to pay 32.5% of the full $100 dividend.
If your local dividend tax is 12.5% you have to pay 12.5% of the VUSA dividend. The withholding tax was charged to the ETF provider (Vanguard) and is not allowed as a tax credit for the investor.
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If i have to pay twice, that would be devastating 
We pay 10% on capital gains and 5% on dividends here
Yeah I forgot to add stocks 
I was presuming same was going for ETF but good to know. To keep staying clear of ETFs
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Thank you guys… So in all cases i can not benefit in any way. I guess i should be happy that at least for us the dividend tax is only 5%
Yes, that is one reason it can be better to own stocks that ETFs. Suppose Apple pays $100 dividend. If I own the stock my tax is $32.50 (as I can take the withholding tax as a credit against UK tax) and I am left with $67.50. But if I own Apple within an ETF like VUSA, there will first be 15% reductions to $85, by the US withholding, and then after UK tax I will have 0.675*85 = $57.375.
You are very lucky to have only 5% dividend tax! UK has 15%, 32.5% or 38.1%.
People often focus on the fact that VUSA has a low OCF of 0.07%. But the much charge comes via the loss of dividend income - compared to owning company shares.
Up until this moment I was very much into ETFs, they’re cheaper and also seemed safer to me (but on what price!).
Let me check if I fully understand the situation.
I get Apple, they pay me $100, of which I receive $85 and that’s the end of it, since my local dividend tax is lower than 15%.
I get VUSD, they pay me $100, of which I receive $85, then pay the local 5% - but on the amount before of after taxation ($100 or $85)?
In fact this must be a local matter, depending on the country. For us I think it’s on the gross profit
Not quite. If Apple pays VUSA $100 then VUSA pays tax and has $85 left to pass on to you. That $85 is now taxable in your country. The point is that the tax of $15 paid at the first step is tax owed by Vanguard, not tax owed by you that was paid on your behalf and collected by Vanguard.
It is just the same as with company profits. A company pays tax on profits and then pays dividends to shareholders from its after tax profits. In this case the company is Vanguard.
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This is mistaken thinking. VUSD never paid you $100. VUSD received dividends, paid tax that was owed by VUSD, and paid you a dividend from what was left after tax and their other fees. Because of other fees you receive less that 85% of the dividends that VUSD has collected from the US companies in which it owns shares.
ETFs are nonetheless still a great way to have exposure to a diverse basket of different companies.
If you compare the yield on VOO and VUSA you will see that the former has a higher yield since VOO does not have to pay withholding tax. Unfortunately, VOO is not available to investors outside the US.
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I fInally got it. Thank you
Just the other day I compared them and was wondering why there’s such a big difference between the two, but now I understand how it works.
Hi, is there any progress regarding improvements of reports for received dividends as it is mentioned above. We do really need reports that will show total gross amount in original currency, total tax already paid in original currency for received dividends and the country where tax has been already paied as well.
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All those things are considered and already in our to-do. We will most certainly implement improvements to the dividend reports in the history section of the app, and also add functionality for generating account statements on demand.
We will focus on this as soon as we finish with our currently in-progress initiatives.
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Thank you for answer. I hope that issue will be solved soon. Can you tell us approximately when we can expect those improvements? Best regards.
I would definitely pay for a special Trading212 account that did all of this for me!
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Something like TurboTax212?
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I have got first dividends from company Enterprise Products Partners LP(EPD). In notification I have got following message:
On 29.04.2020 Enterprise Products Partners LP(EPD) distributed a return of capital of $0.44 per share. You have received €1.23.
In history are following datas:
Amount per share $0.45, number of shares 3 and total amount €1.23.
Actally the value of dividend si 0.445 USD and 29.04.2020 was ex dividend date and palment date was 12.05.2020. That can be found on this link:
https://www.nasdaq.com/market-activity/stocks/epd/dividend-history
If we calculate 0.445$x3=1.335$ with currency ratio EUR/USD 1.0858 that was on 12.05.2020, than that is €1.23.
From abbove mentioned, I can conclude that witholding tax on dividend in USA in this case was 0 and that I have got grosse amount of dividend, so whole amount of tax on dividend I have to report and to pay only in my country of residence. Is that correct? Can you coment on this?
It would be nice that dividend statements are precise, that statement has the correct amount of dividend per share, gross amount of dividend and clear amount of witholding tax in original currency.
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