Taxation risk when trading with IBKR US from UAE - request for confirmation

[Thomas67]

Hi,

Trading stocks in UAE with an IBKR account located in the US (instead of‌ IBKR Ireland for Europe), I wanted to know if you see possible tax issues that‍ might arise in the US, given:
- a residency and tax residency in UAE
- funds located at IBKR US
- the absence of international tax convention between the US⁠ and UAE
- my citizenship which is not American

I guess a dividend tax will⁤ remain held at source depending on the country of the traded stock, as is always⁣ the case, but was wondering if you would see a risk of taxation on capital⁢ gains.

In principle, tax residence in the US depends on the substantial presence test or︀ green card (I wouldn't satisfy these conditions), so the risk would be more related to︁ taxation as a non resident. All in all I think there is no risk (i.e.︂ the location of funds wouldn't be a criterion) but I'd like to have the confirmation.︃

Thanks

 

[JackAlabama]

No tax risk inmo. You pay the 30% withholding︅ tax on usa stocks which is a minor nuisance as you can go with only︆ non div paying stocks or just trade on SGX and HKEX and LSE.
Having any︇ relations with USA can be a challenge in itself but they still seem to attract︈ foreign capital and providing shelter for all kind thereof, so in the immediate future it︉ seems ok.

 

[zzzzzz]

Do you already trade through IBLLC-US? Are Irish accumulating︅ ETFs available there, like CSPX? What about trading CFDs?

 

[Thomas67]

I actually don't trade CFDs or invest‍ in ETFs, not started with IBKR US yet. For CSPX additional trading permissions are apparently⁠ needed. I've seen CFDs sometimes available in TWS, but they don't seem to be reported⁤ on Exchange Listings | Interactive Brokers LLC. Perhaps is it best to reach IBKR's⁣ support even if you're not client.

 

[zzzzzz]

One risk that nobody talks about is US estate tax for nonresidents. The other one‌ is estate distribution in UAE, if you don't have a will, assets are distributed under‍ sharia law.

"The U.S. imposes a 40% estate tax rate on U.S. assets above a⁠ $60,000 exemption threshold on assets of the deceased nonresidents."

 

[TravelAfficionado]

To avoid the US estate tax risk, it may be worth asking IBKR if you‌ can transfer your account to another jurisdiction (e.g. IB Ireland). They sometimes allow clients to‍ select a non-default jurisdiction, but you might need to sign an agreement to be reclassified⁠ as a professional client rather than retail client, which might reduce your consumer protections.

Also, the following Bogleheads.org guides may be useful:
https://www.bogleheads.org/wiki/Nonresident_alien_taxationhttps://www.bogleheads.org/wiki/Non-US_investor's_guide_to_navigating_US_tax_traps

 

[Thomas67]

Many thanks zzzzzz and globaljetset for your valuable answers and suggestion.