Glossary / Tax and structure

Fund domicile

A fund's domicile is the country in which it is legally established, and it determines the withholding tax the fund suffers on its holdings and the estate tax exposure of the person who owns it.

Two funds tracking the same index from different domiciles can deliver materially different returns to the same investor, purely through treaty treatment of dividends.

For a non-US investor, a US domiciled ETF is a US situs asset. An Irish domiciled fund tracking the same index generally is not.

Where people get it wrong

Choosing on fee alone. For a globally mobile investor, domicile is usually the larger number and it is decided once, at purchase.

The framework behind it Fund domicile, and the sixty thousand dollar trap sets out the rule, the arithmetic and where it breaks.

Read the framework

Related terms

Withholding tax Withholding tax is tax deducted at source by the country where income arises before it reaches the recipient, and for fund investors it is deducted from dividends before they ever appear in the fund's return. Situs Situs is the legal location of an asset for tax purposes, which for shares is generally the country of the issuing company and for funds the country of domicile, regardless of where the owner lives or where the asset is held. US estate tax for non-residents A person who is neither a US citizen nor US domiciled is subject to US federal estate tax on US situs assets above an exemption of sixty thousand dollars, at rates rising to forty percent. Expense ratio The expense ratio is the annual percentage of assets a fund deducts to cover its running costs, charged continuously and reflected in the fund's price rather than billed separately.

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