US estate tax for non residents on stocks investment

[desfo2000]

Hello, as you probably know, in case of death, heirs have to pay to IRS up to 40% of all assets US based - stocks on US listed company and ETF included (Apple, Google...), even if carried in a European or Asian bank account.

https://www.taxesforexpats.com/arti...oreigners-investing-in-the-united-states.html
It looks like brokerage firms won't release the account without tax proof payment to IRS.

Any clue about this subject or how to avoid that? Selling before passing away is not an option in case of sudden death.

Thanks

 

[Martin Everson]

desfo2000 said:
Any clue about this subject or how to avoid that?
Click to expand...

Avoid owning any US assets period.


P.S I discussed this in another thread years ago.

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Please note my posts should not be taken as financial or tax advice. Please seek professional advice in that respect.

 

[desfo2000]

Martin Everson said:
Avoid owning any US assets period.


P.S I discussed this in another thread years ago.
Click to expand...

Ok thanks - I would be interested if someone knows about some real case involving US stocks in European / Asian bank account. Question is if tax is really paid... when stocks are carried in a omnibus account is probably harder for the IRS to know the real owner, especially if the account/bank is not US based. I know that US based brokers needs a proof that the payment to the IRS is done, but not sure for a non US based one. By the way if you have a link to the other thread would be great, thanks

 

[Martin Everson]

desfo2000 said:
Question is if tax is really paid... when stocks are carried in a omnibus account is probably harder for the IRS to know the real owner, especially if the account/bank is not US based.
Click to expand...

Yes tax is really paid but by very few who come forward (see below link I posted years ago on here). Omnibus accounts don't protect you when you complete a W8-BEN before you trade US securities. It becomes a case that IRS needs to start receiving the W8-BEN forms people complete but IRS currently do not automatically receive this and it stays in brokers files.

https://www.cnbc.com/2015/11/03/why-foreigners-ignoring-this-tax-could-be-costing-us-billions.html
A Biden administration may perhaps enact new stricter laws.

Anyway avoid US securities.

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Please note my posts should not be taken as financial or tax advice. Please seek professional advice in that respect.

 

[troubled soul]

Martin Everson said:
Avoid owning any US assets period.


P.S I discussed this in another thread years ago.
Click to expand...

Can you Give a link to that thread, If It is possible.

Thanks

 

[Martin Everson]

azb1 said:
Can you Give a link to that thread, If It is possible.
Click to expand...

https://www.offshorecorptalk.com/threads/nevis-llc-and-general-llc-questions.24177/post-81175

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Please note my posts should not be taken as financial or tax advice. Please seek professional advice in that respect.

 

[mike400]

US estate tax could be easily avoided by using Ireland domiciled ETFs which hold US securities instead of US domiciled ETFs, right?

For example using VUSA instead of VOO

 

[Vor]

mike400 said:
US estate tax could be easily avoided by using Ireland domiciled ETFs which hold US securities instead of US domiciled ETFs, right?

For example using VUSA instead of VOO
Click to expand...

my understand is you are correct 🙂 im a US citizen though buying non US domiciled funds for me is a major headache. Two years to go until im no longer a citizen of the "land of the free"

 

[zzzzzz]

desfo2000 said:
Hello, as you probably know, in case of death, heirs have to pay to IRS up to 40% of all assets US based - stocks on US listed company and ETF included (Apple, Google...), even if carried in a European or Asian bank account.

https://www.taxesforexpats.com/arti...oreigners-investing-in-the-united-states.html
It looks like brokerage firms won't release the account without tax proof payment to IRS.

Any clue about this subject or how to avoid that? Selling before passing away is not an option in case of sudden death.

Thanks
Click to expand...

Is the owner of assets a US citizen or US resident?

 

[JustAnotherNomad]

mike400 said:
US estate tax could be easily avoided by using Ireland domiciled ETFs which hold US securities instead of US domiciled ETFs, right?
Click to expand...

Yes, but only for ETFs, not if you hold US stocks directly.

The other way you can avoid US estate tax (or at least minimize it) is by dying as a tax resident of a country that has signed an estate tax treaty with the us. There are a handful of jurisdictions that have done that, of course all have high taxes. 😉
Or, finally, you could use a trust/foundation or some other investment vehicle to invest into US stocks. Possibly even a holding company could work for that, but I'm not sure. You'll want to talk to a US CPA.

 

[Martin Everson]

JustAnotherNomad said:
The other way you can avoid US estate tax (or at least minimize it) is by dying as a tax resident of a country that has signed an estate tax treaty with the us.
Click to expand...

The best way to avoid US estate tax is not to die 😀

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Please note my posts should not be taken as financial or tax advice. Please seek professional advice in that respect.

 

[mike400]

Martin Everson said:
The best way to avoid US estate tax is not to die 😀
Click to expand...

That's not a bad advice 🙂

 

[mike400]

JustAnotherNomad said:
...not if you hold US stocks directly.
Click to expand...

Any solution if I want to hold US stocks directly?

JustAnotherNomad said:
Or, finally, you could use a trust/foundation or some other investment vehicle to invest into US stocks. Possibly even a holding company could work for that, but I'm not sure. You'll want to talk to a US CPA.
Click to expand...

Anybody got more info on this or personal experience?

 

[celizo]

it depends on tax treaties aswell. check it for your country.

 

[JustAnotherNomad]

Only a handful of countries have signed estate tax treaties with the US. Germany and Switzerland have signed for example, but Spain hasn't.

 

[celizo]

I follow french investors forum, and they say France has this too.

 

[JustAnotherNomad]

This should be the full list:
https://www.irs.gov/businesses/small-businesses-self-employed/estate-gift-tax-treaties-international
You'd have to be tax resident in one of those countries to make use of the treaty. Which is what most people here try to avoid.
It would probably be better to avoid the issue by either not holding direct US investments worth over $60k - or using a trust or trading company or some other structure.

 

[celizo]

Even if we are talking about stocks in this thread, it's good to add that if I'm not wrong (I've checked this in the past) bonds holding are not concerned too with this US estate tax.