Irish-Resident but non-domicile (non-US Citizen) - Most Efficient Investment Approach?

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Topic Author
IMightBeRight
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Joined: Fri Sep 24, 2021 9:05 am

Irish-Resident but non-domicile (non-US Citizen) - Most Efficient Investment Approach?

Post by IMightBeRight »

Hello I'm an Irish resident (Lebanese domicile) and between myself and wife we have investment capacity of 350K-500K EUR. Given that I'm a non-domicile in Ireland that gives us a great advantage for EU ETFs (non-Irish domicile) but no access to US-domicile ETFs. It seems that you can technically buy non-EU funds but it will have lots of complications. Complications wealth managers can sort out for you through offshore setup but will mean 1% of the fund value plus whatever custodian/platform they will use.

I think I could still utilize all-world and EU ETFs and not remit to Ireland and still make good returns. Especially given we are covered for all our expenses and more from our Irish Salaries. Now it is just a matter of figuring out if a simple portfolio (as mentioned in this sentence) would suffice or working with a knowledgeable wealth manager could "unlock" more opportunities and hence yield higher return (for the long run) that would justify their fees. Any reading materials and thoughts would be really apprecaited.
TedSwippet
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Joined: Mon Jun 04, 2007 4:19 pm
Location: UK

Re: Irish-Resident but non-domicile (non-US Citizen) - Most Efficient Investment Approach?

Post by TedSwippet »

Welcome.
IMightBeRight wrote: Fri Sep 24, 2021 10:05 am Hello I'm an Irish resident (Lebanese domicile) and between myself and wife we have investment capacity of 350K-500K EUR. Given that I'm a non-domicile in Ireland ...
If you haven't already found it, we have a wiki page for Irish investors:

Investing from Ireland - Bogleheads

Your situation seems specific and unusual though, so it is unclear how much of this might be useful to you. (It's certainly not my area of expertise!)

The one thing that does seem clear is that you would lack US treaty coverage. Lebanon has no US treaties at all. Ireland has a decent US income tax treaty, but what appears to be a poor US estate tax treaty (and if not domiciled in Ireland you probably cannot use this estate tax treaty anyway). Given this fact pattern, because of foreigner-hostile US tax laws you will want to avoid US domiciled ETFs entirely, and stick to non-US domiciled ones.

For an overview, see this wiki page, and related ones:

Nonresident alien's ETF domicile decision table - Bogleheads
Topic Author
IMightBeRight
Posts: 5
Joined: Fri Sep 24, 2021 9:05 am

Re: Irish-Resident but non-domicile (non-US Citizen) - Most Efficient Investment Approach?

Post by IMightBeRight »

TedSwippet wrote: Fri Sep 24, 2021 2:22 pm Welcome.
IMightBeRight wrote: Fri Sep 24, 2021 10:05 am Hello I'm an Irish resident (Lebanese domicile) and between myself and wife we have investment capacity of 350K-500K EUR. Given that I'm a non-domicile in Ireland ...
If you haven't already found it, we have a wiki page for Irish investors:

Investing from Ireland - Bogleheads

Your situation seems specific and unusual though, so it is unclear how much of this might be useful to you. (It's certainly not my area of expertise!)

The one thing that does seem clear is that you would lack US treaty coverage. Lebanon has no US treaties at all. Ireland has a decent US income tax treaty, but what appears to be a poor US estate tax treaty (and if not domiciled in Ireland you probably cannot use this estate tax treaty anyway). Given this fact pattern, because of foreigner-hostile US tax laws you will want to avoid US domiciled ETFs entirely, and stick to non-US domiciled ones.

For an overview, see this wiki page, and related ones:

Nonresident alien's ETF domicile decision table - Bogleheads
Thanks Ted, I was hoping you would respond. Yes, I've checked both linked and more. I think it comes down to me doing some calculations of:
  1. DIY Investing in non-Irish and non-US domiciled ETFs, never remit to Ireland and see what kind of fees I would need to pay to DeGiro or IBKR
  2. Pay an advisor to see what kind of offshore setup they could offer (incl. any US trusts that could work around the 60K and estate tax) and compare the two
Any other/last thoughts?
Topic Author
IMightBeRight
Posts: 5
Joined: Fri Sep 24, 2021 9:05 am

Re: Irish-Resident but non-domicile (non-US Citizen) - Most Efficient Investment Approach?

Post by IMightBeRight »

IMightBeRight wrote: Fri Sep 24, 2021 10:05 am Hello I'm an Irish resident (Lebanese domicile) and between myself and wife we have investment capacity of 350K-500K EUR. Given that I'm a non-domicile in Ireland that gives us a great advantage for EU ETFs (non-Irish domicile) but no access to US-domicile ETFs. It seems that you can technically buy non-EU funds but it will have lots of complications. Complications wealth managers can sort out for you through offshore setup but will mean 1% of the fund value plus whatever custodian/platform they will use.

I think I could still utilize all-world and EU ETFs and not remit to Ireland and still make good returns. Especially given we are covered for all our expenses and more from our Irish Salaries. Now it is just a matter of figuring out if a simple portfolio (as mentioned in this sentence) would suffice or working with a knowledgeable wealth manager could "unlock" more opportunities and hence yield higher return (for the long run) that would justify their fees. Any reading materials and thoughts would be really apprecaited.
Scratch all I said about EU ETFs. They are treated in Ireland like Irish-domiciled ETFs and hence I cannot leverage those. So any recommendation for non-US/non-EU ETFs? even UK Investment Trusts should work in my case.
DJN
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Re: Irish-Resident but non-domicile (non-US Citizen) - Most Efficient Investment Approach?

Post by DJN »

Hi,
you are living and tax resident in Ireland and you have domicile in Lebanon.
Has Ireland got a tax treaty with Lebanon?
Assuming the answer is no, you can probably take advantage of your domicile and buy your investments off shore and then you can avail of the remittance basis of tax. Please remember that I am not a tax expert and I am only chatting casually here.
However if you have an account say with IBKR in EU, Hungary I think then you can buy some investment trusts that are treated like shares.
You must set up an account separate to the investment account which receives all the dividend payments. You will then buy your trusts and hold them taking advantage of the capital gains.
You will pay tax on any money that you remit to Ireland at your marginal rate.
A sample of a portfolio that I might use could be like this:
FCIT
JGGI
SMT
BRK B
MKL
(you can add a small cap IT but the fees are quite high)
For the fixed income side you should just invest in EUNA and whatever other UCITS Bond ETFs that you feel might fit your risk profile and treat these as taxed on the 8 year rule. The gains if any are so small the tax doesn't matter so much.
Remember that estate taxes on US domiciled assets kick in after $60K but with two of you that's $120k.
You could also look at Canada based funds but that is complex and you would need advice.
DJN
Yah shure. | Have a look at the Bogleheads Wiki in the first instance.
Topic Author
IMightBeRight
Posts: 5
Joined: Fri Sep 24, 2021 9:05 am

Re: Irish-Resident but non-domicile (non-US Citizen) - Most Efficient Investment Approach?

Post by IMightBeRight »

Thanks for your response!
DJN wrote: Sun Sep 26, 2021 2:50 pm Hi,
you are living and tax resident in Ireland and you have domicile in Lebanon.
Has Ireland got a tax treaty with Lebanon?
Assuming the answer is no, you can probably take advantage of your domicile and buy your investments off shore and then you can avail of the remittance basis of tax. Please remember that I am not a tax expert and I am only chatting casually here.
However if you have an account say with IBKR in EU, Hungary I think then you can buy some investment trusts that are treated like shares.
You must set up an account separate to the investment account which receives all the dividend payments. You will then buy your trusts and hold them taking advantage of the capital gains.
You will pay tax on any money that you remit to Ireland at your marginal rate.
A sample of a portfolio that I might use could be like this:
FCIT
JGGI
SMT
BRK B
MKL
(you can add a small cap IT but the fees are quite high)
Do you think those trusts are available on DeGiro? My account hasn't been fully activated yet so can't check on my own.
DJN wrote: Sun Sep 26, 2021 2:50 pm For the fixed income side you should just invest in EUNA and whatever other UCITS Bond ETFs that you feel might fit your risk profile and treat these as taxed on the 8 year rule. The gains if any are so small the tax doesn't matter so much.
Those won't avail to the remittance basis of tax, though, right? why would I need such addition to the portfolio in that case? We are fully covered in Ireland with our salaries so I do not intend to complicate my portfolio with tax implication. Or is it just to lower risks? given we both on good tech salaries I might consider all-equities or growth (with no tax implication on the 20% if that even exists) approach for few more years. Any misunderstanding I might be having here?
DJN wrote: Sun Sep 26, 2021 2:50 pm Remember that estate taxes on US domiciled assets kick in after $60K but with two of you that's $120k.
You could also look at Canada based funds but that is complex and you would need advice.
DJN
I'm trying to setup a questrade account and if it goes through then I should be able to access such funds. Any other complications you can think of?
DJN
Posts: 996
Joined: Sun Nov 19, 2017 11:30 pm

Re: Irish-Resident but non-domicile (non-US Citizen) - Most Efficient Investment Approach?

Post by DJN »

Hi,
I can access SMT, FCIT and JGGI on my deGiro account.
I can also access BRK B and MKL.
If you are looking at non UCITS funds such as Canadian domiciled funds try and get some clear advice on that, its complicated.
The allocation to EUNA would be for your fixed income as ballast and on that you have to pay your normal 41% Irish tax on an 8 year deemed disposal basis.
DJN
Yah shure. | Have a look at the Bogleheads Wiki in the first instance.
Topic Author
IMightBeRight
Posts: 5
Joined: Fri Sep 24, 2021 9:05 am

Re: Irish-Resident but non-domicile (non-US Citizen) - Most Efficient Investment Approach?

Post by IMightBeRight »

DJN wrote: Mon Sep 27, 2021 6:36 am Hi,
I can access SMT, FCIT and JGGI on my deGiro account.
I can also access BRK B and MKL.
Thanks for confirming, any allocation example I could look into? any resources you recommend?
DJN wrote: Mon Sep 27, 2021 6:36 am The allocation to EUNA would be for your fixed income as ballast and on that you have to pay your normal 41% Irish tax on an 8 year deemed disposal basis.
DJN
Noted.
DJN
Posts: 996
Joined: Sun Nov 19, 2017 11:30 pm

Re: Irish-Resident but non-domicile (non-US Citizen) - Most Efficient Investment Approach?

Post by DJN »

Hi,
for your query on allocation, I assume you mean how do you allocate across those ITs?
That's tricky, as they are specific funds and best to read up about them to satisfy yourself of their internal allocation and strategies.
FCIT is an old fund with a global outlook.
SMT is more active and has allocation to tech stocks for instance.
JGGI is what it says on the tin, a global income fund.
JMG is an emerging markets IT.
Alongside BRK you have the ingredients for a global portfolio of sorts.
DJN
Yah shure. | Have a look at the Bogleheads Wiki in the first instance.
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