Tax Basics for Non-US Investors

What this guide covers (and what it doesn’t)

Every country writes its own rules. This guide focuses on the common patterns most non-US investors face when buying US stocks and ETFs, so you know which questions to ask.

• How US withholding on dividends generally works for non-US investors.
• Where capital gains are typically taxed (and why holding period matters in many systems).
• Why account type and fund domicile can change outcomes.
• Simple habits that often reduce tax drag without complexity.

For deeper pages, use the Taxes hub. Treat all of it as education, not personalized advice.

Who actually taxes you?

When you hold US assets from abroad, multiple entities can be involved:

• The US (IRS): focuses on US-source income (especially dividends from US companies and US-domiciled funds).
• Your home country: usually taxes you based on tax residency and may tax worldwide income and gains.
• Your broker / fund: applies withholding, collects forms (like W-8BEN), and produces statements.
• Tax treaties: can change default withholding rates and how double-tax relief works.

Two investors holding the same ETF can have different after-tax results purely because of residency, treaty coverage, or wrapper choices.

US dividend withholding: the core idea

When a US company pays a dividend, the US typically withholds tax before the money reaches you.

• Your broker applies a withholding rate to US-source dividends.
• If your country has a treaty and you file the right form (usually W-8BEN), the rate can be lower than the default.
• You see the net dividend in your account; the withholding happens automatically in the background.
• Your home country may tax dividends too, sometimes with foreign-tax-credit rules (varies).

Translation: dividends from US assets are rarely “clean” cash. You care about what you keep after withholding and your local rules.

Capital gains: usually a home-country issue

In many cases, the US focuses on dividend withholding, while capital gains are taxed where you’re resident. This is common but not universal.

• In many systems, gains are taxed when you sell, not while you hold.
• Some countries have different treatment for short vs long holding periods.
• Moving countries can introduce extra rules (exit taxes, deemed disposals, etc.).

The clean behavioral rule that survives across systems: trade less than your emotions want. Every unnecessary sale can create tax drag.

Simple habits that reduce tax drag

You can’t control tax law, but you can control how often you trigger taxes and how much friction you pay.

• Hold long-term: fewer taxable events, less churn.
• Prefer broad index funds: low turnover often means fewer distributions and less complexity.
• Match assets to wrappers: where possible, keep tax-inefficient income in the most tax-friendly wrapper available to you.
• Think after-tax, after-fee: compare strategies by what you keep.
• Avoid FX churn: repeated conversions can add fees and paperwork.

Taxes you create by accident

Many tax problems are self-inflicted via behavior and unnecessary transactions.

• Over-rebalancing: selling winners too often can create taxable gains repeatedly.
• Platform hopping: switching brokers/funds can realize gains without improving your plan.
• Ignoring forms: missing W-8BEN can mean higher default withholding.
• Poor records: cost basis and transaction history matter for reporting.

The winning approach is boring: fewer trades, better records, and resisting short-term panic.

When local tax help is worth it

The higher the stakes, the more a small mistake costs. Consider local help if:

• You have large balances across countries or multiple brokers.
• You moved country or may become dual-resident.
• You’re using business structures, trusts, or complex wrappers.
• You’re unsure how to report foreign income under local rules.

Use this page as the map, then have a local professional confirm the details for your specific situation.