Opening a Vanguard account as a foreigner with a U.S. address? (2024)

cowoxu3, welcome to the forum.

cowoxu3 wrote:Can I buy U.S. domiciled Vanguard mutual funds if I am a foreign citizen and non-resident but I own a U.S. address?

As far as I know, to use Vanguard you will need a Taxpayer Identification Number and a U.S. address. Since you are a non-resident alien and can't open an account online, you'll have to call them for the forms and information.

How do you have a U.S. address if you don't live here?

Depending on what country you live in there may be other, better options than buying through Vanguard.

sabahang wrote: ↑Tue Sep 26, 2017 2:31 pm... They clearly have Non resident Alien status as a valid option in their form and they handle W-8BEN forms so there should be no problem in terms of tax purposes in future but I'm still wondering if I should do it!

I am not sure why you would want to go to so much trouble to open an account directly with Vanguard US when you could instead readily buy Vanguard's -- or iShares, or anyone else's -- index tracking ETFs, using either a local broker or one used to international investments such as Interactive Brokers.

For what it's worth, I am a non-resident alien who happens to have a US SSN, and I could probably improvise a US address if needed. I don't, though. I invest through local brokers and platforms.

This is cleaner, clearer, simpler, and also provides a better degree of isolation from the US's predatory tax policies for non-resident alien investors. In particular, US estate taxes for non-resident aliens, which unless you live in one of the very few countries with a US estate tax treaty, start at just $60k of holdings.

TedSwippet wrote: ↑Tue Sep 26, 2017 4:20 pm

sabahang wrote: ↑Tue Sep 26, 2017 2:31 pm... They clearly have Non resident Alien status as a valid option in their form and they handle W-8BEN forms so there should be no problem in terms of tax purposes in future but I'm still wondering if I should do it!

I am not sure why you would want to go to so much trouble to open an account directly with Vanguard US when you could instead readily buy Vanguard's -- or iShares, or anyone else's -- index tracking ETFs, using either a local broker or one used to international investments such as Interactive Brokers.

For what it's worth, I am a non-resident alien who happens to have a US SSN, and I could probably improvise a US address if needed. I don't, though. I invest through local brokers and platforms.

This is cleaner, clearer, simpler, and also provides a better degree of isolation from the US's predatory tax policies for non-resident alien investors. In particular, US estate taxes for non-resident aliens, which unless you live in one of the very few countries with a US estate tax treaty, start at just $60k of holdings.

Thanks @TedSwippet for your post, here are my main thoughts:
1- I'll have to deal with US tax system anyways whether I use a local or a US broker because I'm planning to invest in US domiciled securities. Both US and non-US brokers would ask for a W-8BEN and withhold 15% (30% without treaty) off of dividends

2- Non-US brokers who invest in US securities are usually much more expensive in terms of transaction fee. In my country Estonia they often also have annual management fee just for having an account with them

3- They only reason to go with Vanguard really (as an international) is if you for some reason prefer to invest in Index Mutual Fund rather than their equivalent ETFs. Vanguard then would be the only place to get it from to my knowledge. I can go with ETF but as I'm planning to invest long term I wouldn't want to have to deal with spreads and other stock related things (what else?). Also I was hoping for their Admiral commissions (which to be honest haven't researched how much money you need to become eligible and whether it would then be cheaper than their ETFs TRs). If their fund Admiral commissions wouldn't beat their ETF TRs, then maybe there is not much point in preferring their funds over their RTFs?

sabahang wrote: ↑Wed Sep 27, 2017 12:20 pmI'll have to deal with US tax system anyways whether I use a local or a US broker because I'm planning to invest in US domiciled securities. Both US and non-US brokers would ask for a W-8BEN and withhold 15% (30% without treaty) off of dividends.

Given that ready alternatives exist, why hold US domiciled ETFs when the US tax risk with them is as high as it is? Everything you hold above $60k in US domiciled ETFs is potentially liable for US estate tax. And a cash holding in a US broker is 'US situs' for the US estate tax, whereas a cash holding in a US bank or a non-US broker would not be.

You can own more or less identical underlying assets through EU domiciled ETFs such as Vanguard's Ireland domiciled ones. These entirely sidestep a heap of US tax issues. The extra distance from confiscatory US tax laws for NRAs more than compensates for their slightly higher TERs.

USA domiciled broker IB (Interactive Brokers) has branches in almost every country. You can use USA domiciled assets or assets domiciled in other countries in your portfolio.

IB is a blessing for USA-NRA Bogleheads.

galeno wrote: ↑Wed Sep 27, 2017 6:00 pmUSA domiciled broker IB (Interactive Brokers) has branches in almost every country. You can use USA domiciled assets or assets domiciled in other countries in your portfolio.

IB is a blessing for USA-NRA Bogleheads.

Unfortunately IB has monthly management fee for passive investors and not desirable for those who are not looking to trade

sabahang wrote: ↑Wed Sep 27, 2017 12:20 pm

TedSwippet wrote: ↑Tue Sep 26, 2017 4:20 pm

sabahang wrote: ↑Tue Sep 26, 2017 2:31 pm... They clearly have Non resident Alien status as a valid option in their form and they handle W-8BEN forms so there should be no problem in terms of tax purposes in future but I'm still wondering if I should do it!

I am not sure why you would want to go to so much trouble to open an account directly with Vanguard US when you could instead readily buy Vanguard's -- or iShares, or anyone else's -- index tracking ETFs, using either a local broker or one used to international investments such as Interactive Brokers.

For what it's worth, I am a non-resident alien who happens to have a US SSN, and I could probably improvise a US address if needed. I don't, though. I invest through local brokers and platforms.

This is cleaner, clearer, simpler, and also provides a better degree of isolation from the US's predatory tax policies for non-resident alien investors. In particular, US estate taxes for non-resident aliens, which unless you live in one of the very few countries with a US estate tax treaty, start at just $60k of holdings.

Thanks @TedSwippet for your post, here are my main thoughts:
1- I'll have to deal with US tax system anyways whether I use a local or a US broker because I'm planning to invest in US domiciled securities. Both US and non-US brokers would ask for a W-8BEN and withhold 15% (30% without treaty) off of dividends

2- Non-US brokers who invest in US securities are usually much more expensive in terms of transaction fee. In my country Estonia they often also have annual management fee just for having an account with them

3- They only reason to go with Vanguard really (as an international) is if you for some reason prefer to invest in Index Mutual Fund rather than their equivalent ETFs. Vanguard then would be the only place to get it from to my knowledge. I can go with ETF but as I'm planning to invest long term I wouldn't want to have to deal with spreads and other stock related things (what else?). Also I was hoping for their Admiral commissions (which to be honest haven't researched how much money you need to become eligible and whether it would then be cheaper than their ETFs TRs). If their fund Admiral commissions wouldn't beat their ETF TRs, then maybe there is not much point in preferring their funds over their RTFs?

Per regulations, US domiciled mutual funds are only available to US residents.

Per Vanguard policy, they don't allow non-US residents to
purchase ETFs either.

Some exceptions seem available for long term customers. I think regulations were tightened after 9.11.

You should find the cheapest access to ETFs that you can.