I’m looking at a group of iShares ETFs but the base currency is either USD or euro, based on the key information document.
My question is, are any of these subject to overseas tax and if so is this automated? I’m not interested in information regarding UK tax as this is all in the ISA. I just want to understand more about overseas tax implications as this may make me reconsider these ETFs.
The funds in question and tickers are:
iShares NASDAQ 100 — (CNX1)
iShares MSCI Europe Information Technology — (ESIT)
iShares MSCI Europe Health Care — (ESIH)
iShares Listed Private Equity — IPRV
Im pretty sure there are GBP versions of these ETFs from my searches on Morningstar, but for some reason invest engine only has the USD/Euro versions.
My question was more regarding overseas tax as all my investments are within the ISA allowance so I am free of any UK tax obligation on my profits.
My main concern was if I pick an ETF how would I know if I need to pay tax to another country? I think from your link the response is this
UK investors are exempt from withholding tax on the income they receive from an ETF domiciled in Ireland.
So I will just assume that from this, because my investments are within an ISA wrapper, and the funds are domiciled in Ireland then I have absolutely no tax obligations to think about?
It all depends on where the ETF are domiciled. With Ireland and Luxembourg you are good, but some funds are domiciled in other countries for example the VanEck series of funds which are homed in the Netherlands. Out of the 15 VanEck fund available on this platform four are dividend paying and they are subject to Dutch withholding tax before the money even hits your account. With your distribution funds the dividend get taxed at source so you only receive the nett dividend. As an example VanEck Morningstar Developed Market Dividend Leaders (TDGB) ISIN: NL0011683594 is quite popular and paying quarterly with a current yield of 5-ish percent but you take a 20% tax hit on the dividend
In addition to @nedjohn list of HMRC approved funds (thanks, btw) here are two resources I use to check various taxes and other interesting facts and figures: