So, I've recently realized that IBSJ now allows creation of NISA accounts, and also (reportedly) allows Americans to buy US-domiciled ETFs, such as VT, through the seicho side of the NISA.
So, as an American who already holds a pretty decent amount of Vanguard ETFs through IBSJ, could someone explain to me (someone who thought NISA was a pipe dream for us and therefore never looked into it in detail) what the main advantage(s) to starting to instead buy Vanguard ETFs through a new NISA account within my IBSJ? Untaxed dividends in Japan? Any other major differences than just buying them in my regular IBSJ?
by Hachi_Ryo_Hensei
3 comments
Yes I have been trying to understand as well and essentially what I have come to understand is that you get non taxed Japanese retirement account, you would only have to deal with American capital gains taxes as I have come to understand.
I think it gets pretty technical but most people will have a very low income for US taxes as they can exclude all of their income from US taxes which gives you a large buffer for 0% taxes on gains and dividends to the US. And of course it is tax free in Japan.
I do not know the thresholds but most people would be either 0% or around 15%. If you make a lot of money taxes from the US can go up to 20% (I am not 100% sure though).
TLDR
Most people pay either 0% or 15% on Nisa gains and dividends which is lower than the japanese 20%. That is the biggest benefit.
I think this post by u/redfinadvice should answer your question in detail: https://www.reddit.com/r/JapanFinance/s/muqfPwFehH
TLDR: Japan won’t tax your IBSJ NISA account. The US will, but US capital gains taxes are *much, much, much* lower than Japan’s.
Comments are closed.