What are the rules for living abroad and investing in the American market?

Many foreigners, whether Americans or non-Americans, want to enter the American stock market and reduce tax risks. The answer to this question depends on whether you are American or non-American. If you are not an American, you'd better use a fund registered outside the United States to enter the American market.

For example, it is best to invest in non-American platforms (such as Swissquote, Saxo or others) rather than American platforms (such as interactive brokers and eToro), whether by yourself or through consultants. This is because even if the W8-Ben form is signed, there is little risk of inheritance tax and other issues in the United States.

Secondly, it is best to buy the Standard & Poor's 500 Index registered on the London Stock Exchange. P500), or another similar Irish stock exchange, rather than the new york Stock Exchange (NYSE).

People forget this basic fact. Today, you can buy Standard & Poor's 500 ETF funds in pounds and dollars on the London Stock Exchange and other exchanges.

Pioneer, BlackRock and Anshuo have all created dollar products held outside the United States because they know the inheritance tax and other potential taxes that non-Americans may face. Cost and performance are the same.

Therefore, by using non-American brokers to invest in index funds or ETFs that track the US market but are registered in Canada, Britain or Ireland, the US tax net can be completely avoided.

Not only to avoid, but also to avoid many risks in this process. But if you want to buy individual stocks instead of the whole market, it is more difficult to do so. On the other hand, if you are an American, it makes sense to invest in a company registered in the United States and holding funds.

Equally important:

People have a portable solution. If you live in country A and then you move to country B, it is very important for the brokerage company not to close your account. Let me give you a simple example. A friend of mine opened an account with the Dutch agent Derrige. He should have invested in a platform registered in a country with higher tax efficiency (such as Switzerland), but this is another issue (capital gains tax, etc.). ).

What really shocked him was that he moved from an EU country to Asia. Because they can only accept 18 European countries, they closed his account. Therefore, this means that he must sell his position, take pains to open another account and pay capital gains tax. Therefore, it is very important to build a platform that can be accepted by at least 170- 180 countries in the world. As a foreigner, in some industries, you can be transferred almost anywhere.

As mentioned above, it is very important to have a movable account in countries that do not levy capital gains tax. Simple example. If you are a foreigner living in Saudi Arabia or the United Arab Emirates (no capital gains tax) or Singapore (no overseas income or capital gains tax), you can pay 0% capital gains tax if your account is located in a country with 0% capital gains tax. This does not apply to countries that tax by nationality, such as the United States or Eritrea, but it applies to most countries.

Therefore, the most important thing is that with a little planning, people can avoid the tax risks brought by being exposed to the American market as expatriates.