Strategically too, actually, given the proposed tax hike will take years to come to full effect, in which many things, including the US admin itself, will change. Given the tendency of politicians to spin whatever the previous ones did in a negative way as a method to convince voters I don’t think a Democrat POTUS trying to cancel/amend this if it can be tied to capital flight from the US tanking 401(k)s, for instance. But that’s an optimist view. My wife calls me “optimistic robot” sometimes
The pessimistic view would be that by then anything related to 899 will have completely and utterly had its effect, and a new US admin may say “Hey…why change it now…?” - certainly wouldn’t change it for foreigners, so it could well stick.
I have both actually, and yes I am aware. Ireland is indeed the big one as EU investors can’t invest in non-UCITS ETFs due to the MiFID, but my dividend ETF is SCHD as of 1.5 month now so it’s US domicile so I have been hypothesizing for a while.
The other things that are automatic in that law are the various efforts from the OECD to get a “minimum” tax which have been implemented in the entire EU, UK and Japan AFAIU, so Irish ETFs would be hit.
We can sell tax free, and yes I am aware that this would essentially be tax avoidance if we sell before ex-date every time.
Now what I’m thinking about, I am totally fine with paying tax on the dividends, but I am absolutely not fine with paying unrecoverable withholding taxes and other such bullshit.
Could there be thought of some new regulation with the tax office where I’m purposefully avoiding the tax, but stil pay a virtual tax as if I received the dividend? Not as a punishment (afaik that’s how it can be done if there are systematic tax avoiders), but in accordance with the tax office?
They get the exact same amount of tax, but I am avoiding all the withholding taxes.
Win-win
Granted only makes sense if saved tax > transaction cost/spread, but with that new law, can quickly make sense.
Also no more partial DA-1 etc.
Its good to be optimistic
US stock market tanking is in no one’s interest. Neither for ones who have 100% of their portfolio in US stocks nor for people who have 20-50% exposure.
Basically, but that‘s essentially the same process as for accumulating funds.
What I‘m “proposing” is basically being allowed to sell and re-buy around the dividend dates, and then paying normal tax.
Maybe it can be ruled like with accumulating funds though, meaning you “tick a box” or something and then if you held that fund for x amount you pay tax like it paid out the dividends to you.
I know what you are proposing but if the purpose is to not pay WHT while paying full income tax, then such instrument already exist
Of course Synthetic ETFs come with their own issues and risks.
However if the goal is to buy/sell US ETFs just before dividend dates, then I doubt that tax office can be party to this because this would label them as tax offenders by US officials
Tax office will simply say- if you don’t want additional WHT just invest somewhere else. It’s not their priority to promote foreign investments.
The thing is if the measure comes in, you’ll have people selling and that will tank the price of your investments too. Now, if you are OK to hold long term and you think it will recover after a decade, then it is no issue and you can take the opportunity to buy.
Yes, if enacted, it would make UBS less competitive vs. its peers and less profitable. So UBS is determined to fight the increase of capital requirements they are targeted for. And they will have some good arguments, some may embarrass Swiss politicians.
For background, the demise of Credit Suisse would have come to a decision point many years earlier hadn’t FINMA started to grant what was (in)transparently named ‚regulatory filters‘ about 10 years back. This translated to an approval for the bank to operate with much less capital than the official rules mandate, while keeping that fact secret. Oddly enough, nobody was able to determine later who in politics really was accountable for that approval.
Arguably, even higher capital requirements will do more harm than good if trust in the regulator to even enforce the existing ones is damaged.
"It also found that the filter decision had not been communicated to Finma’s supervisory board, which at that time included the current president of the regulator, Marlene Amstad. " So former head of FINMA was propably in the bed with some CS top-shots (ironically ofc.).
President using federal forces without request of governor thereby breaking internal protocol
Government telling companies what to do and what not to do
Individual tariffs can be requested if CEO can strike a deal with administration
Lawyers cannot operate independently or else their business will be attacked using government power
Debt keeps on rising, budget deficit keeps on rising at the same rate of arrogance
Judges are being threatened if their decision is not aligned with government position
Other countries are being threatened with random tariffs, taxes if they don’t behave (basically being told that they cannot decide what happens in their countries, but they will be told)
Other countries are threatened when they either form a bloc or buy military equipment from other major powers
Neighbours are being threatened to be annexed
Rich people are told that they will face consequences if they support opposition
Should this mean an increase in equity risk premium or decrease? For China it meant increase (even though half of the things didn’t happen) but for US maybe we should say “this too shall pass”
I am starting to question this assumption that US market can never face fate of Japan , Greece or China. It feels like we are trying to justify our choices rather than think rationally because we are heavily invested in USA.
I’ll relate what a US colleague who used to work for UNH once told me when we were discussing investments: “US companies are in reality extremely competent accounting companies, with a veneer of whatever they’re saying they’re doing”. This quote stuck with me, the US admin may be behaving like that of a Banana Republic but that doesn’t mean it won’t change in the relatively near future, or make their firms any less competent at what they do in the present.
It’s true. But that’s true for earnings but don’t you think US commands high multiples because of market factors and other elements that are getting into grey zone now?
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