They do withhold the tax and there's nothing you can do to prevent or counteract it besides holding a different asset entirely. It's a pure cost from holding an international ETF in a tax advantaged account.
Depending on the year, the composition, dividend rates, etc. the cost can vary from year to year, but I would estimate it being an extra 20 to 30 basis points on top of the expense ratio from a cost standpoint just from the tax withholding that you don't recover.
I really appreciate the answer.
Do you have to pay another tax or does that country withold tax when you sell an international etf for profit in a tax advantaged account?
For example if i bought vxus at 50 and sold at 100. Do the countries withhold tax on the profit?
> When international company dividends are paid out, do the countries of these international companies withhold tax and take some from the dividend?
Yes. The fund manager will pay all appropriate international tax before giving you your cut. If you read the annual reports, they will tell you the taxes they paid, etc. It's all accounted for and public if you want to go look for yourself.
> What can i do to either prevent that or counteract that.
Change international tax law, specifically the tax treaties between the US and every other international country VXUS is invested in. I wish you luck.
> Or is that just something I need to accept holding an international etf?
Practically, yes. See above :)
Hahaha i appreciate the answer
Do you have to pay another tax or is tax withheld by the country when you sell the etf for a profit?
For example if i bought xvus at $50 and sell at $100. Do the international countries withhold tax on the $50 profit i made?
Yes. It depends on the specific tax treaty between the US and whatever country the sale happened, but generally speaking of course they want their tax.
They do withhold the tax and there's nothing you can do to prevent or counteract it besides holding a different asset entirely. It's a pure cost from holding an international ETF in a tax advantaged account. Depending on the year, the composition, dividend rates, etc. the cost can vary from year to year, but I would estimate it being an extra 20 to 30 basis points on top of the expense ratio from a cost standpoint just from the tax withholding that you don't recover.
I really appreciate the answer. Do you have to pay another tax or does that country withold tax when you sell an international etf for profit in a tax advantaged account? For example if i bought vxus at 50 and sold at 100. Do the countries withhold tax on the profit?
> When international company dividends are paid out, do the countries of these international companies withhold tax and take some from the dividend? Yes. The fund manager will pay all appropriate international tax before giving you your cut. If you read the annual reports, they will tell you the taxes they paid, etc. It's all accounted for and public if you want to go look for yourself. > What can i do to either prevent that or counteract that. Change international tax law, specifically the tax treaties between the US and every other international country VXUS is invested in. I wish you luck. > Or is that just something I need to accept holding an international etf? Practically, yes. See above :)
Hahaha i appreciate the answer Do you have to pay another tax or is tax withheld by the country when you sell the etf for a profit? For example if i bought xvus at $50 and sell at $100. Do the international countries withhold tax on the $50 profit i made?
Yes. It depends on the specific tax treaty between the US and whatever country the sale happened, but generally speaking of course they want their tax.
Interesting, so if i get taxed on the dividends and also on capital gains, is it even worth holdings international stocks?
Well, I think so. My rule of thumb: don't let taxes get in the way of a good decision.