Opinion on yield max ETF

[FATCA]

I think people who care about stock yields rather than total returns are mentally challenged (I am being nice and civil by not calling them retarded).

Why not go for only appreciation and withdraw from your portfolio by selling a % of your portfolio, or take a loan against your portfolio instead?

Dividends usually have withholding tax which you cannot avoid but capital gains tax is more avoidable

 

[Mercury]

Why not go for only appreciation and withdraw from your portfolio by selling a % of your portfolio, or take a loan against your portfolio instead?

Dividends usually have withholding tax which you cannot avoid but capital gains tax is more avoidable

These are 2 different approaches.

With trading you try to time the market which involves more active management and random profits/losses when selling at inappropriate time. Borrowing against your assets has a cost and risky unless it's a tiny %.

With dividends you just harvest passively income that you can partly or fully reinvest to keep growing your capital and income, especially with frequent weekly/monthly distributions that make DCA more efficient.
Price to pay is indeed US WHT, that you can low down to 10%/15% depending on your tax residence.

 

[SilverNeo]

Price to pay is indeed US WHT, that you can low down to 10%/15% depending on your tax residence.

This is only true in very few cases for example take Japan (10% WHT) or Switzerland (15% WTH) which seems great but when you count local taxes (regardless individual or companies)

Japan effective tax rate: 10% WHT+ 22.8% local tax = 32.8% (its a bit less but lazy to do the calculation as the 22.8 is on the 90% you receive after the 10% WHT not on the full 100%)
Switzerland: 15% WHT+ 12% local tax = 27% (its a bit less but lazy to do the calculation as the 12% is on the 85% you receive after the 15% WHT not on the full 100%)

So its not worth doing a company in Switzerland (except if you already have one or live there) as the savings are so minimal.

Now if you look at something like Bulgaria that is where you want to be if you are getting good money from dividends

10% WHT + No additional tax so you save 20%

But my whole point is that it does not work how most people think ohh USA takes 10% or 15% WHT compared to lets say 30% in Dubai so that means you are losing 20% or 15% which is not true if you look at the local taxes that you have to pay.

Now somewhere like Bulgaria is a different story.

So you can live in the UAE and have a Bulgarian company and pay 10% instead of 30% but the hassle is only worth if you have a good amount coming in as dividends.

 

[JustAnotherNomad]

With dividends you just harvest passively income that you can partly or fully reinvest to keep growing your capital and income, especially with frequent weekly/monthly distributions that make DCA more efficient.

Dividends lower the share price. It just means you have less control over when you take money out and you pay more tax on it.

 

[JustAnotherNomad]

So you can live in the UAE and have a Bulgarian company and pay 10% instead of 30%

No, you can't.

 

[SilverNeo]

No, you can't.

Why not?

Especially with a nominee director a nominee director might cost a 100-150 euro a month now if you are making 100k+ in dividends... you do the math

The business is run from Bulgaria with a Bulgarian director therefore pays tax in Bulgaria but there is no additional tax in bugarija on dividends except the 10% US WHT

 

[JustAnotherNomad]

Why not?

Article 21, Limitation on Benefits.
At least 50% of the company have to be owned by Bulgarian tax residents, otherwise you can't get the lower rate. Even if you have 100 employees in Bulgaria.
It has been discussed here many times before.

 

[JohnnyDoe]

This is shifting OT, but remember that IBKR relies on the papers you give them in regards to your tax residence

 

[SilverNeo]

Article 21, Limitation on Benefits.
At least 50% of the company have to be owned by Bulgarian tax residents, otherwise you can't get the lower rate. Even if you have 100 employees in Bulgaria.
It has been discussed here many times before.

So whats stopping me from getting a small apartment (not expensive btw) and giving a bill as proof of residence to IB.

This seems extremely easy to get around.

 

[Mercury]

Dividends lower the share price. It just means you have less control over when you take money out and you pay more tax on it.

Maybe but there is no more passive and less risky solution if you only live from your investments and need a regular income stream, unless ofc you just need to sell <1% net of tax of your low-volatile assets yearly to live comfortably.