Investment vehicle

[AlexGE]

I live in a country that doesn't have a DTA with USA. at the same time US market provides the best exposure to ETFs that cover an entire world.
When I receive any dividends the WHT is 30% , so I'm looking for a way minimize it to at least 15% as if my country had a DTA with US.

Obvious solution would be a Cyprus company - DTA with USA plus no WHT on dividends paid by a company to a non-res.

Are there any cheaper options?

 

[Larin]

Why not buy an Irish-domiciled ETF? The fund pays 15% (DTA with US), but there‌ is no additional WHT so your effective tax rate becomes 15%.

 

[AlexGE]

Yes, for some ETFs that's a solution but they are sometime not tradable (low⁠ or no liquidity, wide spreads and on) and I hold some stocks directly, not through⁤ ETFs

 

[Jerry1911]

Not going‍ to work due to the LOB clause in the tax treaty between Cyprus and the⁠ US.

 

[AlexGE]

Even thou Cyprus would have a substance‍ and the investment income won't be the main source of income for the company?

 

[Jerry1911]

Check with relevant tax‍ advisors, AFAIK it still won't work.

 

[Marzio]

Setup a Romanian micro enterprise.‌ You will pay 1% tax on income up to 500K and there are no WHT‍ on non-resident individuals so if you move your tax residency to Cyprus you'll achieve effective⁠ 11% effective total taxation.

10% WHT on dividends from US to Romania without LOB +⁤ 1% corporate income tax up to 500K

In Cyprus dividends are tax free.

If for⁣ some reason you don't like Cyprus you could potentially receive dividends tax free under Portugal⁢ NHR or any territorial taxation country or UAE

The only "problem" is that the Romanian︀ company must hire a full time employee.

 

[AlexGE]

An employee should be a resident of Romania? Any social taxation \ limits⁢ on salary?

 

[Marzio]

You are‌ looking for "substance" meaning "somebody" who does "somehing" ideally in an office.

You could simulate the breakdown of‍ costs with this payroll calculator.

 

[alek9898]

If the RO company don't have employee its 3% from income up to⁢ 500k

 

[Marzio]

https://home.kpmg/us/en/home/insigh...ry-recent-tax-law-changes-vat-excise-tax.html

 

[alek9898]

Its sounds to be right and I really don't‌ know until now, even after call with my accounting this afternoon xD

 

[AlexGE]

Looks like there's an issue with a Romania company: it has to pay⁢ 1% of turnover and there's a chance that all the invested amount as soon as︀ I be returned to the company will be taxed ..