23 ms·

Makes a huge difference when considering the tax implications.

by gargarplex 5y ago

fennecfoxen 5y ago
Many retirement funds are in a tax shelter either way, though.
- Scoundreller 5y ago
  Problem is, the US-based euro or emerging market fund will have withholding taxes applied to it, unless it’s a retirement-specific fund. You just won’t see the tax withholdings on your statement because it shows up on theirs.
- bradlys 5y ago
  Many but not all and that is the important detail. Also I keep money in index funds even if I don't plan on using that money for retirement. (e.g. downpayment on a house, saving for another large purchase, financial buffer, etc.) I also keep money in index funds that are in regular brokerage accounts because 401k + backdoor roth ira isn't sufficient for retirement if you make $200k+/yr. (True for even lower amounts too but whatever)
tut-urut-utut 5y ago
That largely depends on the tax laws where you live.
evandijk70 5y ago
That depends on which country you live in. In my country (The Netherlands) you pay a fixed percentage of the value of your portfolio. Dividends are not taxed.
- jacquesm 5y ago
  > Dividends are not taxed. I wish. But no, dividends are taxed: https://www.belastingdienst.nl/wps/wcm/connect/bldcontentnl/belastingdienst/zakelijk/winst/dividendbelasting/dividendbelasting https://www.belastingdienst.nl/wps/wcm/connect/bldcontentnl/... What you probably miss is that dividend tax for non substantial holdings (less than 5% of the total stock) is withheld before being paid out.
  - yread 5y ago
    and you have to care about where the index fund is domiciled. Otherwise you get dividend leakage. Some Vanguards are domiciled in Reland where 30% of dividends are withheld as taxes even though we need to pay just 15%. It might be difficult to get the difference back
cesarb 5y ago
Indeed it does. Here in Brazil, for instance, dividends are not taxed, while selling a stock (to take advantage of growing stock prices) has a capital gains tax of 15%.

Makes a huge difference when considering the tax implications.

fennecfoxen 5y ago

Many retirement funds are in a tax shelter either way, though.

Scoundreller 5y ago
Problem is, the US-based euro or emerging market fund will have withholding taxes applied to it, unless it’s a retirement-specific fund. You just won’t see the tax withholdings on your statement because it shows up on theirs.
bradlys 5y ago
Many but not all and that is the important detail. Also I keep money in index funds even if I don't plan on using that money for retirement. (e.g. downpayment on a house, saving for another large purchase, financial buffer, etc.) I also keep money in index funds that are in regular brokerage accounts because 401k + backdoor roth ira isn't sufficient for retirement if you make $200k+/yr. (True for even lower amounts too but whatever)

tut-urut-utut 5y ago

That largely depends on the tax laws where you live.

evandijk70 5y ago

That depends on which country you live in. In my country (The Netherlands) you pay a fixed percentage of the value of your portfolio. Dividends are not taxed.

jacquesm 5y ago
> Dividends are not taxed. I wish. But no, dividends are taxed: https://www.belastingdienst.nl/wps/wcm/connect/bldcontentnl/belastingdienst/zakelijk/winst/dividendbelasting/dividendbelasting https://www.belastingdienst.nl/wps/wcm/connect/bldcontentnl/... What you probably miss is that dividend tax for non substantial holdings (less than 5% of the total stock) is withheld before being paid out.
- yread 5y ago
  and you have to care about where the index fund is domiciled. Otherwise you get dividend leakage. Some Vanguards are domiciled in Reland where 30% of dividends are withheld as taxes even though we need to pay just 15%. It might be difficult to get the difference back

cesarb 5y ago

Indeed it does. Here in Brazil, for instance, dividends are not taxed, while selling a stock (to take advantage of growing stock prices) has a capital gains tax of 15%.