Investing in International Stock Markets from Chile

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Re: Investing in International Stock Markets from Chile

Post by admin » Fri Oct 19, 2018 8:38 am

hey perhaps someone knows the answer to this question. i have been googling, and not finding a clear answer.

someone that is classifed as a none resident alien for u.s. tax purposes, buys a u.s. listed etf, that invest in none-u.s. stocks or bonds, that pay a diveden, is there still the 30% tax withholding on the divedens (assuming no tax treaty for simplicity)?

techinicaly, is it still classified as a effectivly connected u.s. income?
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Re: Investing in International Stock Markets from Chile

Post by jehturner » Fri Oct 19, 2018 9:40 am

Sounds interesting. I was wondering how long it would take for someone to step in and offer a proper online investment service with reasonable rates locally (though as an international organization employee there are tax advantages to me keeping most savings overseas). Do you happen to know what the rates are like on their local mutual funds (https://www.renta4.cl/fondos-de-inversi ... os-locales), compared with the banks? (As far as I know there is still only 1 ETF in Chile...)

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Re: Investing in International Stock Markets from Chile

Post by admin » Fri Oct 19, 2018 11:01 am

one thing i have not tried is setting a limit order on an international stock, and see if it will execute on a day that renta4 is closed. do they send it to their market proxy immediatly, or hold it in their system?

i typicaly never set limit orders to buy long term, and walk away. only when i am trying to buy immediatly, as i know i am not getting real time quotes (mins vs. micro second real time) so no one front runs me with a market order.
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Re: Investing in International Stock Markets from Chile

Post by admin » Fri Oct 19, 2018 12:26 pm

funny, i have had it my head recently that i need to diversify out of chile more. i am just realy having trouble doing it. as much as i love chile, too many eggs in one basket.

however, the more i kick the tires on international markets and various types of none-peso assets, the better chile looks. went to brazil: nope. went to peru last month: nope. china is a train wreck waiting to happen. the u.s., europe, etc, etc all messes. russia is a ponzie scheme.

i am just having a hell of a time convincing myself that 99% of the investiable universe is worth putting money in to vs. the risk.

ironicaly, one of the more atractive ones i have seen recently was the copx etf (copper miners) , and the only reason i dont buy it is because well my whole life is already too tied to the price of copper.
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Re: Investing in International Stock Markets from Chile

Post by admin » Fri Oct 19, 2018 12:29 pm

funny, i was thinking about investing peru. went to lima. the best companies in peru, with cranes hanging over the buildings, are all chilean: fallabela, riply, parqarouco, etc.
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Re: Investing in International Stock Markets from Chile

Post by Space Cat » Fri Oct 19, 2018 1:00 pm

We just go for 70% All-World ETF because nowadays everything looks too unpredictable for me to pick region-based funds (other than the Chilean one). LatAm, Eastern Europe, India, SE Asia are all stuck in corruption bottlenecks.

I put a bit into robotics and automation (RBOT) but not touching pure IT companies because I'm already working in tech, so investing in the same industry would be a poor diversification.

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Re: Investing in International Stock Markets from Chile

Post by jehturner » Fri Oct 19, 2018 10:47 pm

admin wrote:
Fri Oct 19, 2018 8:38 am
someone that is classifed as a none resident alien for u.s. tax purposes, buys a u.s. listed etf, that invest in none-u.s. stocks or bonds, that pay a diveden, is there still the 30% tax withholding on the divedens (assuming no tax treaty for simplicity)?
Sorry, missed this earlier. I don't claim to have the authoritative answer, but I think if the ETF is domiciled in the US or held via a US broker then they'll charge the withholding tax. Eg. Internaxx send a W-8BEN form if one wants to trade US-listed securities. I believe it doesn't matter where the underlying investments are, but the fund itself may pay some taxes there. My practical experience with taxes is very limited, but I do have some contact with the US system as an ":alien:", eg. through my employer's retirement scheme.

Common wisdom is that people who are not US citizens or residents should buy funds traded in another country, even if those funds are invested in US equities or bonds, as much as anything to avoid obnoxious estate taxes.

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Re: Investing in International Stock Markets from Chile

Post by eeuunikkeiexpat » Fri Oct 19, 2018 11:17 pm

Also, would one as a US citizen-slave in their right mind recommend a NRA get a tax ID number from the beastly Empire just to do such an investment?
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Re: Investing in International Stock Markets from Chile

Post by admin » Mon Oct 22, 2018 10:16 am

yea, I am aware of the hole TIN and filing hassle. I am assuming here just sucking up the 30% loss on withholdings (rather than trying to file and claim it), would be what happens if their is withholdings at all.

I did come across, mostly Canadian sites, talking about the withholdings on dividends for investing in U.S. based ETF's. There is no capital gains tax for foreigners, but what I am after is specifically the withholdings on dividends and interest payments.

I believe the tax status would be under a 1099-BEN declaration (think I got that right).

It is the "effectively connected" hair I need to split.

Some Canadian funds seem to have gotten around this, by investing directly in the underlying (none-u.s.) companies; rather than investing in an ETF that invest in a U.S. ETF (that minor detail, seems to make it effectively connected income). For example, I think Vanguard seems to have some ETFs that are structured specifically to avoid this problem, and targets foreign investors.
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Re: Investing in International Stock Markets from Chile

Post by admin » Tue Oct 23, 2018 7:02 am

Space Cat wrote:
Fri Oct 19, 2018 1:00 pm
We just go for 70% All-World ETF because nowadays everything looks too unpredictable for me to pick region-based funds (other than the Chilean one). LatAm, Eastern Europe, India, SE Asia are all stuck in corruption bottlenecks.

I put a bit into robotics and automation (RBOT) but not touching pure IT companies because I'm already working in tech, so investing in the same industry would be a poor diversification.
yea, i am not liking much of what i see right now outside of chile. i got a bit of EEM emerging market etf, and dviy em dividen etf. all of them are a bit too top heavy with asian and especialy china. korea i find interesting as they are sort of a chile of asia, with proxy exppsure to the rest of asia without directly buying things in china. hyundai and samsung are big and global. a bit over priced though.

bought some em bond etfs that pay some crazy high dividens.

the developed markets i just dont see the up side to for the most part.

tech is for suckers. you need to be an angle investor before they go public to even be in the game. no way i am paying say 70 x forward earnings for something like amazon, even if it is the future. the rest of the fang is even less appealing.

colombia i am keeping an eye on. peru i am not convinced they are stable yet.

in chile, when the prices dip: bci, fallabela, copec, concha y torro, sqm, riply are my favorites right now and i am adding for the long term when an opertunity arrises.

i should have dumped lan when the price of gas went up. they can not seem to get out of their own way right now, and never were able to get a handle on the way they expanded too fast. it is like they have a new biz strategy every week, and can never execute it fully before changing course again. i'll wait out a dip in gas prices and dump them.

i am still hopeful about the builders in chile, even though the interest rates are rising.
Spencer Global Chile: Legal, relocation, and Investment assistance in Chile.
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Re: Investing in International Stock Markets from Chile

Post by admin » Mon Oct 29, 2018 5:58 pm

well my question above just got more complicated, when i seen a passing mention on a stock forum that one of the instruments i am after is technicaly treated as a bond, not a stock. thus, it is making interest payments, and capital return payments, on foreign em bonds.

another i am after i found this nugget in an artcle, i had forgotten:
While typically called dividends, the monthly payments from ETNs are technically distributions of interest payments on the ETN note based on the dividends paid by the underlying components, pursuant to the terms of the indenture
think i am going to buy a bit, and just see how it is handled.

in any case, what ever they are called, they pay 16%, 17%, and 23% whatever you call them (dividens, intrest, distributions, etc). even giving up 30% on them in withholding still leaves a pretty healthy payout while i am experimenting with the tax withholding issues for a none resident alien that i am helping put together a portfolio outside of chile.
Spencer Global Chile: Legal, relocation, and Investment assistance in Chile.
For more information visit: https://www.spencerglobal.com

From USA and outside Chile dial 1-917-727-5985 (U.S.), in Chile dial 65 2 42 1024 or by cell 747 97974.

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Re: Investing in International Stock Markets from Chile

Post by jehturner » Tue Oct 30, 2018 9:48 am

Can't you find something similar trading on a European exchange? Eg. the Internaxx ETF selector gives 45 hits for category "Global emerging markets bond" (including funds denominated in USD if that's convenient)...

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