Taxation of Vanguard Int'l funds for non-residents

According to some info I found online, an Irish UCITS is treated as a taxable entity and thus, assuming that the fund is resident in Ireland for purposes of the US/IRL income tax treaty (which most such funds usually are, but you should verify this fact), the Fund would be entitled to benefits under the US/IRL tax treaty. As a result, it is most likely the case that dividends received by the Vanguard Fund will be subject to a 15% withholding tax, or the lower 5% withholding tax if the Fund has a "direct investment" in the dividend-payor (usu., this requires that the Fund own more than 10% of the equity of the dividend-payor). For purposes of the US/IRL treaty and US income tax principles, the Fund is not transparent, and therefore you are not eligible to claim benefits under the US/IRL income tax treaty. Your tax treatment will, instead, depend on the treatment of the Fund under the income tax treaty between Ireland and your country of residence. It is more likely that the Fund will also be treated as non-transparent under that treaty and, as a result, you will be treated as receiving dividends from the Fund as and when the Fund makes distibutions to you under the terms of your investment in the Fund. As a result, you would probably not be entitled to claim a credit for any US taxes paid by the Fund (the same way that you would, in general, not be entitled to claim a foreign tax credit for any US taxes paid by any other Irish company you invested in). If the Fund is regarded as transparent (i.e., a pass-through) under the treaty between your country and Ireland, then you would be treated as recognizing the Fund's items of income and expense, and, as a general matter, would probably be allowed to claim either a credit or a deduction for any US taxes paid by the Fund. At bottom, since the Fund is likely to be regarded as the beneficial Irish owner of any US-source dividend income received by the Fund, the issue regarding how you're taxed will depend on how the Fund is treated in tax matters between Ireland and your home country rather than between Ireland and the US.

Vanguard exchange-traded funds (VIPERS) might be an alternative that I would guess you could purchase via a broker. The list at

not include the "World fund". I don't know why youwould be "only able to invest in one fund". Commissions canbe low, but they are not the zero you can get from a regularfund. The annual expenses can be less, so you still mightcome out ahead of a regular fund. This is a related search: