Here is my theory.
VUSA is distributing ETF. This means it pays dividends to the investor.
First, US corporation pay dividends to Ireland domiciled fund (ETF). The tax is 15% (according to double taxation treaty between US and Ireland).
Secondly, the fund pays dividend to the investor. The dividend is not taxed in Ireland, but is taxed by the country where the investor is tax resident (where he lives).
This is resulting in double taxation.
AFAIK for small dividends there is no dividend tax in UK. But in other countries there is no threshold, even small dividends are taxed. In Bulgaria there is 5% tax on dividends if they are not alreday taxed at the source or there is no double taxation treaty.
The accumulating ETF based in Ireland would be taxed with 15% dividend withholding tax in USA. And the profit is received by the investor by selling shares of the ETF. This means that the investor in accumulating ETF (like CSSPX) is paying only capital gain taxes.
In some countries will be more beneficial to the investor to invest in accumulating ETF, because there is no capital gains tax (in Bulgaria there is no capital gains tax when investing in stocks and ETFs traded on EU stock exchanges).
In other countries will be more beneficial to the investor to invest in distributing ETFs, because there is no tax on dividends or the tax on dividends is lower than capital gains tax.
For Bulgarian investors it’s more tax beneficial to invest in US dividend stocks directly, if there is no commissions for buying them and the holding period is infinite or very big (and the profits are mostly from dividends, not from capital gains). Because according to the double taxation treaty between US and Bulgaria the withholding tax on dividends is only 10% (15% in treaty between US and Ireland). However, there is capital gains tax when the investor sells the stock (10%), because the stock is traded outside EU stock exchanges.
Am I understanding it correctly?