Offshore vs Onshore Investment

[concerned]

Here is a link to refer to when thinking of dealing with investment advisors here and offshore investments

https://www.andrew-drummond.com/2014/09 ... tch-up-of/

[LukeTek]

Thank you all for the comments. I am asking some questions just so I can report the answer here, but I am not going for this portfolio.

To open an iDeco account it seems I need the physical MyNumber card (every broker I tried requested to scan it...), which I haven't received yet, so I'll have to wait a bit for it.
I think that I will go for an international broker for the time being: since I don't have to pay taxes on that for the first five years, I might as well take full advantage of it. Correct me if I'm wrong, but I think I will have to pay only the 10% which will be detracted directly from the broker, right? I already have an IB account set up. I will use either my Transferwise account (I already successful transferred some money from it to IB) or my Sony bank account. Sony bank also provides with 3 free JPY to JPY transfers a month, so I think I'll be able to skip at least that commission. Anyway I will use this thread for all questions related with IB transactions.

I am also going forward with the second advisor, but I guess it's now purely to understand exactly what kind of offering and fees he woud provide me with.

[RetireJapan]

I think that I will go for an international broker for the time being: since I don't have to pay taxes on that for the first five years, I might as well take full advantage of it.

Unfortunately my understanding of this is that, as of 2017, it is not correct. Foreign earned income may be exempt from Japanese taxes for the first five years of residency (depending on how it is earned and whether it is remitted to Japan), but investment income is deemed to occur where the individual is, not where the investments are, and thus is taxable from year one.

[mule96]

Thank you all for the comments. I am asking some questions just so I can report the answer here, but I am not going for this portfolio.

Great decision

I already have an IB account set up. I will use either my Transferwise account (I already successful transferred some money from it to IB) or my Sony bank account. Sony bank also provides with 3 free JPY to JPY transfers a month, so I think I'll be able to skip at least that commission. Anyway I will use this thread for all questions related with IB transactions.

I wrote a lot in that thread If you have a working way of funding IB that is great! TW is maybe not that cheap though? It would also be interested in knowing if the international transfers from Sony Bank work for this!

[LukeTek]

Unfortunately my understanding of this is that, as of 2017, it is not correct. Foreign earned income may be exempt from Japanese taxes for the first five years of residency (depending on how it is earned and whether it is remitted to Japan), but investment income is deemed to occur where the individual is, not where the investments are, and thus is taxable from year one.

you seem to be correct: from
https://www.nta.go.jp/english/taxes/ind ... 019/00.pdf
and
https://www2.deloitte.com/content/dam/D ... 015.315%25.

I think I understand that this kind of investment would fall under "dividend income", and would be taxable at 20,42%. Too bad...

It would also be interested in knowing if the international transfers from Sony Bank work for this!

I'll let you know, I'll post my experience there

[RetireJapan]

I think I understand that this kind of investment would fall under "dividend income", and would be taxable at 20,42%. Too bad...

It's only taxable if you have a taxable event, for example: receiving a dividend, or selling and making a capital gain. If you just buy and hold there is no tax due until you sell or receive a dividend.

[LukeTek]

I think I understand that this kind of investment would fall under "dividend income", and would be taxable at 20,42%. Too bad...

It's only taxable if you have a taxable event, for example: receiving a dividend, or selling and making a capital gain. If you just buy and hold there is no tax due until you sell or receive a dividend.

Sure, that's what I am planning to do.
Something is not clear to me though: let's take the recent example of Tesla entering the S&P500. Since the construction of the fund changes, does an ETF like VOO have to pay dividends?
Also, what's your (and everyone else's) take on buying UCITS ETFs instead of "regular" ones considering I am European? Example: instead of VOO buying VUSA/GSPX. Would it make any difference tax-wise?

[RetireJapan]

The main thing is the US withholding tax on dividends. If the fund contains only US-listed companies, it doesn't make a difference, but if it also contains non-US companies it is probably better (all things being equal) to have a non-US listed fund. There is also the issue of US inheritance taxes, which may or may not be a problem depending on where you are when you die.

[Kanto]

I think I understand that this kind of investment would fall under "dividend income", and would be taxable at 20,42%. Too bad...

It's only taxable if you have a taxable event, for example: receiving a dividend, or selling and making a capital gain. If you just buy and hold there is no tax due until you sell or receive a dividend.

Sure, that's what I am planning to do.
Something is not clear to me though: let's take the recent example of Tesla entering the S&P500. Since the construction of the fund changes, does an ETF like VOO have to pay dividends?
Also, what's your (and everyone else's) take on buying UCITS ETFs instead of "regular" ones considering I am European? Example: instead of VOO buying VUSA/GSPX. Would it make any difference tax-wise?

It depends if this is with a Japanese broker or not. If it is with a Japanese broker, do not choose American funds, choose Japanese domiciled funds.

I would also look beyond the American markets.

Msci ACWI - global equity index (Emaxis Slim All Country)
FTSE All-World (Rakuten Global Equities) -> Tracks Vanguard VT

If you want to stick with the S&P500 with a Japanese broker, pick a Japanese mutual fund or ETF.

eMAXIS Slim 米国株式（S＆P500）

MAXIS米国株式（S＆P500)

This allows you to avoid, Tripple or double taxation.

[LukeTek]

I am planning to go with eMAXIS Slim whole world (either this or this depending on whether I want to include Japan or not) with iDeco and possibly NISA (if available). But for my main portfolio I think I will stick with IB.

I have heard before about US withholding 40% when you die. From this article: "The US levies a 40% estate tax on US assets (stocks, bonds, ETFs, funds, cash in a US-based brokerage) above US$60K when the account holder who is a NRA passes away". Am I correct in saying that if I use a UCITS ETF that would not apply?