US ETFs no longer purchasable in Europe

Shai

my use case is probably a bit special. I get shares in a US company as part of my job compensation. I sell the shares for dollars and transfers the money to a dollar account in AIB. Then I do a wire transfer for a decent amount of money to FirstTrade every 6 months.

Skelet0n

Contacted Lynx there today, no dice, seems they're stuck with the same deal as Degiro since they're both based there.

jive

PaulKK wrote: »

Thanks. That looks interesting. Do you fund by wire transfer? Reading their conditions it looks like normal bank transfer is only for US residents. They also charge 50 USD to withdraw via wire too?

Was thinking of using revolut to fund it in dollars but not sure if it would work.

Anyone experience of this?

Some pain in the arse trying to find somewhere to invest in US ETFs now. Don't want to get hit with mammoth euro--->dollar conversion fees and then dollar--->euro when returning. Was much easier going through DeGiro until January :mad:

gavmcg92

PaulKK wrote: »

Shai wrote: »

you can buy them as an Irish citizen through firstrade.com

Thanks. That looks interesting. Do you fund by wire transfer? Reading their conditions it looks like normal bank transfer is only for US residents. They also charge 50 USD to withdraw via wire too?

Was thinking of using revolut to fund it in dollars but not sure if it would work.

Just having a chat with one of the reps for firstrade. Seems like the quote above is incorrect. The fee for the transfer out is 30USD.


Few other answers that others may find helpful


"[font=arial, sans-serif]Shares are held under our clearing firm Apex's street name. We do not charge maintenance fees. We only charge commission for trades. For commission rates, please visit: [/font][font=arial, sans-serif]https://www.firstrade.com/content/en-us/pricing[/font][font=arial, sans-serif]. There is no limit on ETF tradings. International outgoing wire is $30."[/font]


From what I can see on PTSB a transfer to the US is €31.50 unless I am mistaken. For my portfolio size, this is a non runner. Guess I need to look at moving into direct holdings instead of ETFs.

Cute Hoor

gavmcg92 wrote: »

Just having a chat with one of the reps for firstrade. Seems like the quote above is incorrect. The fee for the transfer out is 30USD.


Few other answers that others may find helpful


"[font=arial, sans-serif]Shares are held under our clearing firm Apex's street name. We do not charge maintenance fees. We only charge commission for trades. For commission rates, please visit: [/font][font=arial, sans-serif]https://www.firstrade.com/content/en-us/pricing[/font][font=arial, sans-serif]. There is no limit on ETF tradings. International outgoing wire is $30."[/font]


From what I can see on PTSB a transfer to the US is €31.50 unless I am mistaken. For my portfolio size, this is a non runner. Guess I need to look at moving into direct holdings instead of ETFs.

Have a look at Interactive Brokers, they may be the one for you.

Sparxy

Cute Hoor wrote: »

Have a look at Interactive Brokers, they may be the one for you.

I've been using Interactive Brokers for a short while now. Their offering is very comprehensive (far more complex than I require!), so that takes a bit of getting used to.

On the plus side: no restrictions on trading of ETFs (most of my holdings are US-based ETFs), low trading costs, and I can transfer directly from my PTSB account to them for no cost, or use a swift transfer in branch for larger amounts (at a cost of 50 cents).

Account maintenance costs are non-trivial but are waived depending on the size of your positions.

I'd certainly recommend them based on my experiences so far.

gavmcg92

Sparxy wrote: »

I've been using Interactive Brokers for a short while now. Their offering is very comprehensive (far more complex than I require!), so that takes a bit of getting used to.

On the plus side: no restrictions on trading of ETFs (most of my holdings are US-based ETFs), low trading costs, and I can transfer directly from my PTSB account to them for no cost, or use a swift transfer in branch for larger amounts (at a cost of 50 cents).

Account maintenance costs are non-trivial but are waived depending on the size of your positions.

I'd certainly recommend them based on my experiences so far.

Do you have a link to the maintenance fees? Have only 5k with Degiro at the moment with a second tranche of 5k moving over this month when a cheque clears. Will probably be below the minimum.

Skelet0n

gavmcg92 wrote: »

Do you have a link to the maintenance fees? Have only 5k with Degiro at the moment with a second tranche of 5k moving over this month when a cheque clears. Will probably be below the minimum.

10 less commissions a month plus balance must be maintained at 10k+.

Cute Hoor

gavmcg92 wrote: »

Do you have a link to the maintenance fees? Have only 5k with Degiro at the moment with a second tranche of 5k moving over this month when a cheque clears. Will probably be below the minimum.

https://www.interactivebrokers.com/en/index.php?f=1590&p=stocks1
https://www.interactivebrokers.com/en/index.php?f=4969

jive

Sparxy wrote: »

I've been using Interactive Brokers for a short while now. Their offering is very comprehensive (far more complex than I require!), so that takes a bit of getting used to.

On the plus side: no restrictions on trading of ETFs (most of my holdings are US-based ETFs), low trading costs, and I can transfer directly from my PTSB account to them for no cost, or use a swift transfer in branch for larger amounts (at a cost of 50 cents).

Account maintenance costs are non-trivial but are waived depending on the size of your positions.

I'd certainly recommend them based on my experiences so far.

As of a few days ago, IB no longer offer US-based ETFs to EU customers. Would like to figure out how to actually going about doing this now, saving cash which is just sitting there that i would usually pump into a vanguard fund via DeGiro but don't want to be exposed to the 8 year deemed disposal as it will kill compounding in the long-run.

First trade seems the only option then? Anyone actually transferred money to them and bought US ETFs? Experiences?

Shai

jive wrote: »

As of a few days ago, IB no longer offer US-based ETFs to EU customers. Would like to figure out how to actually going about doing this now, saving cash which is just sitting there that i would usually pump into a vanguard fund via DeGiro but don't want to be exposed to the 8 year deemed disposal as it will kill compounding in the long-run.

First trade seems the only option then? Anyone actually transferred money to them and bought US ETFs? Experiences?

yes, I have. Not sure what you wanna know, but feel free to ask away. The entire thing was pretty straightforward.

jive

Shai wrote: »

yes, I have. Not sure what you wanna know, but feel free to ask away. The entire thing was pretty straightforward.

Cheers. Is it the same as DeGiro? Just transfer across from bank account, purchase shares using what you transferred over directly? Any transfer fees or anything?

Skelet0n

I just opened an account with TastyWorks. It's an options platform mostly but you can buy US ETFs on it.

Think that's what I'll be doing.

If anyone wants a referral, think we both get some credits or something: https://start.tastyworks.com/#/login?referralCode=XZHTCRJ28K

Or just tastyworks.com if you don't.

Shai

jive wrote: »

Cheers. Is it the same as DeGiro? Just transfer across from bank account, purchase shares using what you transferred over directly? Any transfer fees or anything?

Unfortunately not. You'll need to do a wire transfer to transfer money across, which costs me (through AIB) $25. Then, if you want to get Firstrade to send money back your way, it'll cost ya $50. There'll be a EUR to USD currency conversion fee on top of that as well. I only do one or two transfers to Firstrade a year to keep the account funded, and I'm lucky enough to have access to dollars without having to deal with currency conversion fees.

PaulKK

Skelet0n wrote: »

I just opened an account with TastyWorks. It's an options platform mostly but you can buy US ETFs on it.

Think that's what I'll be doing.

If anyone wants a referral, think we both get some credits or something: https://start.tastyworks.com/#/login?referralCode=XZHTCRJ28K

Or just tastyworks.com if you don't.

It may suit your needs, but it looks like they have a 40 dollar fee to withdraw also and can only be funded by wire.

That's not great for someone who would want to buy 1 unit if VTI or VOO per month for example.

What is the advantage of them over firsttrade for example?

Skelet0n

PaulKK wrote: »

It may suit your needs, but it looks like they have a 40 dollar fee to withdraw also and can only be funded by wire.

That's not great for someone who would want to buy 1 unit if VTI or VOO per month for example.

What is the advantage of them over firsttrade for example?

You can also deposit by cheque, no need for wire. Seems to be withdrawal fees are unavoidable.

iknorr

I have just setup a Firstrade account and am trying to add fund. I see the option for wire & theres a domestic (ACH) or international Swift. Im trying to use transferwise to send the USD but they are having trouble with it.
For the anyone on here using firstrade - how are you funding your account?

Shai

I got my bank (AIB) to do a wire transfer. I'm not sure Transferwise is accepted for funding US brokerage accounts due to some laws with regards to illegal money transfers (I'm being super vague, I know).

If you can get it to work, please let us know, cause I'd be interested in using it instead of doing wire transfers.

iknorr

Will do. I have been dealing with transferwise most of the day so, hopefully they will come back with a solution. I sent Firstrade a mail also. Lets see what they say.
 I see that there two options on the transfer wire info.  Domestic or International 
For domestic it uses ABA (ACH) and for International its using Swift . Which one do you send via? Domestic ABA or International Swift?

Shai

International Swift. ACH is only available if you're sending from a US bank.

Shai

Also, you can just call their US office. It's what I did, and it gets you a reply a lot faster than sending emails.

Dardania

Dardania wrote: »

excitementcity wrote: »

Dardania wrote: »

I've setup a spreadsheet to try understand this issue over 24 years, starting from a notional E1,000 - feel free to twiddle the numbers, and let me know if I've made a bad assumption: https://docs.google.com/spreadsheets/d/e/2PACX-1vSeQni67A5rcgf8drQP8KgQIntNSibeG5KSKHX5PgR1TXnsvQ8jymFVGvvvD87f8SYJ0AuAoppVz6mu/pubhtml 

In some cases, the difference isn't so much, and in other cases it is disastrous for the UCITS scenario.

Having Accumulation type ETFs is essential in the UCITS world to be competitive from what I can see - in order to get a big spread compared to income type ETFs from the US.

Dardania just wondering if you have a downloadable version of this spreadsheet? Many thanks

Sorry, try this one: https://drive.google.com/file/d/1TgG5Oj_cq7dL8BJoeX8IMiAdk9XPYer5/view?usp=sharing - or if that doesn't work PM me

So, after a detailed analysis of this spreadsheet by Sparxy (many thanks on that!) - I had some errors in the spreadsheet. They don't change the overall guidance (UCITS isn't as bad as everyone thinks, and in fact now our analysis suggests UCITS might perform better when dividends above 1.75% are considered):
[font=Open Sans, Arial, Helvetica, sans-serif]- I had wrongly carried some of the gain from the first 8 years to the subsequent 8 years, which means that the exit tax was being paid twice[/font]
[font=Open Sans, Arial, Helvetica, sans-serif]- A small error with how dividends were calculated on the non UCITS case (they were wrongly shown in year one presuming year one's capital growth has already occurred)[/font]
[font=Open Sans, Arial, Helvetica, sans-serif]- I had wrongly cal'd the CGT on the non-UCITS case in year 24, by not including the increasing principle presuming re-investment of dividends[/font]

[font=Open Sans, Arial, Helvetica, sans-serif]I would be obliged if interested people could look over this (the links above are still valid)  - is it true that the UCITS situation is not as bad as many here think?[/font]
[font=Open Sans, Arial, Helvetica, sans-serif]I have added some more scenarios, where it is possible to see how in a low dividend world, non UCITS works best, whereas when dividends are 2% and above, UCITS is the clear winner (presuming of course one goes for an Accumulating ETF)[/font]

Cute Hoor

Shai wrote: »

Unfortunately not. You'll need to do a wire transfer to transfer money across, which costs me (through AIB) $25. Then, if you want to get Firstrade to send money back your way, it'll cost ya $50. There'll be a EUR to USD currency conversion fee on top of that as well. I only do one or two transfers to Firstrade a year to keep the account funded, and I'm lucky enough to have access to dollars without having to deal with currency conversion fees.

All stock trades on Firstrade now $0. Not sure when they went to $0, didn't see any communication about it.

Shai

Cute Hoor wrote: »

All stock trades on Firstrade now $0. Not sure when they went to $0, didn't see any communication about it.

emm, so how do they make money now?

Cute Hoor

Shai wrote: »

emm, so how do they make money now?

Good question! Broker assisted trades and Margin trading as far as I can see

jive

iknorr wrote: »

Will do. I have been dealing with transferwise most of the day so, hopefully they will come back with a solution. I sent Firstrade a mail also. Lets see what they say.
 I see that there two options on the transfer wire info.  Domestic or International 
For domestic it uses ABA (ACH) and for International its using Swift . Which one do you send via? Domestic ABA or International Swift?

Any luck with this?

At this point I'm considering subjecting myself to EU-domiciled ETFs and the 8 year deemed disposal rule... can already imagine how sick I'll be assuming the market keeps humming along for another 8 years with the tax bill I'll have to pay I'd much rather set it and forget it with a US ETF.

iknorr

jive wrote: »

Any luck with this?

At this point I'm considering subjecting myself to EU-domiciled ETFs and the 8 year deemed disposal rule... can already imagine how sick I'll be assuming the market keeps humming along for another 8 years with the tax bill I'll have to pay I'd much rather set it and forget it with a US ETF.

Yup, I have been holding off reply until I had some progress.

So Firstrade account was easy to set up. All the usual bits, nothing out of the ordinary.
I transferred a test amount off 100 USD from AIB to First Trade. Sent Thursday arrived on Monday. Amount credited was 100 USD. AIB charged twenty euro if i remember correctly and they also done the currency exchange.

To be honest it was fairly easy to set up, it was just the unknown for me that had me doubting it.

I think Ill stick with the AIB transfer. I can use Transferwise to do the conversion cheaper with larger amounts. The plan is for 3 or 4 transactions a year into the low cost index funds and maybe a few bonds.

Dardania

iknorr asked a question from me via PM regarding my spreadsheet and why there is a tax calculation every year on the dividends from the US funds, and why there are no dividends shown for the UCITS case. 
I tried answering via PM, but it keeps giving an error message - I am living outside Ireland at the moment and think boards have PM blocked outside Ireland...so I'll answer here:

In the UCITS case, I am assuming that people are investing in Accumulating (also known as Capitalising) ETFs. This is where the dividneds received from the constituent stock is reinvested to the fund, optimising the compound interest effect. Some good reading is here: https://forum.mrmoneymustache.com/investor-alley/accumulating-vs-distributing-advantages-and-disadvantages/ & https://www.justetf.com/uk/news/etf/avoiding-etf-performance-pitfalls.html

With the US scenario, I have shown dividends being paid, and accordingly, income tax due on them. I understand from reading around in the past that US ETFs are obliged by law to pay out all dividends to the investor. This is the equivalent in the UCITS world of a Distributing or Income share class ETF. That means that the investor is obliged to complete the form 11 from ROS every year.
I have furthermore shown that the investor in US funds re-invest manually any dividends. In practice, that can be hassle but is doable (there might be transaction fees, and also trying to match ETF unit cost to the dividends you have, however with a larger portfolio that grief is lessened)

Does this make sense? Your summarisation is spot on:
Is it a case that the Irish domiciled case, you only pay tax when you cash out and at every 8 years (and no dividends are taxed?) . Versus the US where you must pay yearly tax on any dividends received by the ETF?

From doing this exercise, I really feel that the factors at play in choosing the UCITS or US path are: the TER of the fund (US are slightly lower than UCITS), whether likely dividend income will exceed say 2%, and the investors honesty in declaring dividend income.

Shai

iknorr wrote: »

I can use Transferwise to do the conversion cheaper with larger amounts.

Did you get that to work?

blorg

Almost all US brokers will reject transfers from TransferWise as third party, the problem is they don't come from your account but from TW's account, and brokers usually require any incoming transfers to come from a bank account in YOUR name. Transfers with TW in the US, even if you have their Borderless account, do not appear to come from your account but from TW. I believe in Europe they may work, as first party with your name on it, but they don't in the US.

FirstTrade like most brokers will reject attempted third party transfers, they say this on their site.

It's nothing to do with TW being illegal, it's just the technical way that their system is implemented, a broker does not see the transfer as coming from your account and the default position is to reject any third party transfers over money laundering concerns. If TW ever manage to fix this so transfers appear to come from an account in YOUR name, they should potentially work with any broker. But that's not how it is right now unfortunately.

One broker I know DOES take transfers via TW is DriveWealth. They are a relatively small broker but specifically target international investors and have a tech platform that they sell to third parties, they power for example Stake in Australia and Freetrade in the UK. They very specifically target international investors, and make an explicit point that they take TransferWise for Europeans.

You are going to lose a lot going the conversion with AIB, on larger amounts it's not the €20, it's the percentage they chop on the bad forex rate. Even TW is not fantastic for very large amounts for investing but it's better than AIB.

Interactive Brokers would have been ideal for this- they have fantastic forex and take SEPA transfers in EUR but I believe they stopped US ETFs to EU residents recently as well.