Investing outside the United States can be surprisingly complicated, especially for people who are used to the simplicity and low fees of US index funds. In the US, investors can pick up a Vanguard index fund and know they are getting tight spreads, strong liquidity, and very low costs. Once you step outside the US, the menu gets smaller and the rules get tougher.
The problem starts with domicile. A fund’s domicile is simply the country where the fund is legally registered. A US-domiciled fund follows US rules and is treated as a US asset. The moment a non-US investor buys one of these, two issues appear:
• Dividends are subject to 30 percent US withholding tax unless reduced by a treaty
• US estate tax can apply once the position exceeds roughly 60,000 dollars
For many global investors, that estate tax threshold alone is a deal breaker.
This is why Irish-domiciled ETFs exist. Ireland has tax treaties in place with the US that reduce the dividend withholding tax to 15 percent, and because the fund itself is domiciled in Ireland, not in the US, the estate tax exposure is removed. That combination makes Irish funds the most common choice for non-US residents who want low-cost index exposure.
Vanguard and a few others offer Irish-domiciled ETFs that track major US and global indices. They will not be identical to US funds. Liquidity is slightly lower, the selection is narrower, and the expense ratios run closer to 10 to 20 basis points instead of 3 to 5. But in practice, they are still high-quality, low-cost options.
One nuance. If you are investing in parts of the market that have very low dividends, such as small cap growth, the withholding tax issue is smaller. In that case, some non-US investors still choose US-domiciled funds, accepting the estate tax risk because the ongoing drag from dividend taxes is minimal. That decision depends entirely on an investor’s estate structure and risk tolerance.
So the short answer is yes, you do have access. Irish-domiciled ETFs are the closest equivalent to US index funds that non-US investors can use without creating estate tax exposure. They are not perfect substitutes, but they solve the two big problems: excessive withholding tax and US estate tax risk.
A Better Way to Access US Markets from Abroad
Irish-domiciled ETFs give non-US investors a clean, practical path to global diversification. While they are not as broad or as inexpensive as US options, they remain the most reliable structure for avoiding unnecessary tax complications and still capturing long-term market returns.
This post is adapted from a recent episode of the Scholar Wealth Podcast. For more perspective on cross-border investing and accessing diversified ETFs as a non-US resident, listen to the full episode here.