What is the US dividend tax rate for a non-resident alien owning a US domiciled ETF holding non-US companies? Assume no tax treaty so the tax rate for the SPY ETF would be 30%.
An example would be a Hong Kong resident purchasing the MSCI China (MCHI) ETF.
What is the US dividend tax rate for a non-resident alien owning a US domiciled ETF holding non-US companies? Assume no tax treaty so the tax rate for the SPY ETF would be 30%.
The tax would still be 30%.
This is precisely why US ETFs are generally unattractive to non-resident aliens, especially if they are resident in jurisdictions that have no applicable tax treaties with the US.
The Bogleheads wiki has an article about nonresident alien taxation. Excerpt:
Apart from an exemption for some US source 'portfolio interest' income ... US withholding tax applies regardless of the actual assets held by a US domiciled ETF. Even if all of the ETF's assets are non-US stocks, the US will still take 30% or lower treaty rate in dividend tax.
