US vs. Ireland tax treaties

Taxes
1

What I don’t get re. US vs. Ireland domiciled funds for Swiss investors: The US only seems to have 58 tax treaties, Ireland has 76. So investing in a globally diversified US domiciled ETF (eg VT) is beneficial for L2WT, but perhaps not for L1WT, if various non-treaty VT-countries withold all their dividends, and the total withholding sum is greater than the 15% L2WT benefit from US domiciled stocks vs. Ireland-domiciled. But maybe I missed a point?

2

If US stocks were a smaller portion of the global stock market, this could be significant. However, as it is, VT is still better overall as long as you get a DA-1 tax credit for the 15% L2WT.

See https://www.bogleheads.org/wiki/Nonresident_alien_investors_and_Ireland_domiciled_ETFs#Example_calculation_for_FTSE_World_ETFs

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3

Thanks so much! Would you happen to know, if the Boglehead article took into account the actual sum of withheld dividends due to the lack of a treaty, country by country, company by company?
And the information seems a little dated, can we still rely on it?

4

How about VTI + exUS (IR) ETFs?

5

This would likely be optimal. However, IE-domiciled All-World ex-US ETFs don’t exist, as far as I know. The All-World portion of your portfolio would have to be constructed from at least 6 ETFs (last I checked) to cover the same countries as VT. And this is even prone to changes if EM countries outside Europe or Asia Pacific were to get reclassified as developed countries. Keeping up with this and rebalancing is not worth it, in my opinion.

For me, the reasonable options are either VT or IE-domiciled VWRL, or the TER-optimization of the latter with two ETFs: VEVE (Developed World) + VFEM (EM). That’s assuming you want global stocks based on market cap.

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According to the Hire Act 871m synthetic ETFs can have 0% US WTH on MSCI World for instance for the North America portion. + the ETF is IE domiciled… such as the MSCI World from Invesco…

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That’s interesting, thanks. In theory, synthetic ETF seem to be a great idea due to tax optimization. But I don’t know how they really perform in practice. Synthetic Invesco MSCI World doesn’t seem to have outperformed physically replicating Ishares Core MSCI World in the past 10 years, despite this tax advantage and a slightly lower TER?

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The tax treaty came into effect in 2018 and since then it does outperform the physical Ishares

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