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US domiciled ETFs always distribute dividends and make you pay 30% tax on the dividends if you are a foreign investor.

I'm looking for ETFs domiciled in the US that do not distribute gains but I found most accumulating ETFs in Europe. Are there any active in the US? Why do they seem so unusual in the US, considering the amount of foreign investors?

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    Some ETF's that hold futures and that systematically roll the futures then don't pay a dividend. Otherwise, BRK.B is a diversified company that doesn't pay a dividend.
    – S Spring
    Commented Dec 15, 2022 at 22:52

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US mutual funds and ETFs that do not distribute the dividends collected from the stocks that they hold, and the capital gains (if any) from the sale of securities that the funds are invested in, to their shareholders must pay income tax (at corporate rates) on that income. By distributing the dividends and capital gains to the shareholders, the tax burden is shifted to the shareholder. A fund that chooses not to distribute the dividends and capital gains to the shareholders will necessarily report a lower return, which will make it less attractive to investors. Thus, as a general rule, US mutual funds and ETFs tend to distribute capital gains and dividends instead of accumulating them.

Perhaps tax laws are different in other parts of the world making accumulative ETFs and mutual funds have different options on how to handle dividends and capital gains.

See also this previous answer of mine from nine years ago. Thanks to @Dave_thompson for reminding me of it.

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  • Makes sense, as most ETFs that accumulate dividends are in tax haven countries.
    – dgolive
    Commented Dec 16, 2022 at 11:15

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