The Fool FAQ

International Investing

The Fool FAQ

Can a non-U.S. citizen invest in U.S. companies from outside the U.S. using the Internet? Who's the best broker for investing from abroad? Do I have to pay U.S. taxes on profits?

As far as U.S. brokers are concerned, the only problem with setting up an account for someone from another country is making sure that you have funds in the account, in U.S. dollars, in time for any trades to settle. If you can set something up with your bank to wire funds to a brokerage account whenever you place a trade, or simply keep enough money in a money market account at the brokerage to cover any trades, then there is no problem with trading in the U.S. markets. Many people do it.

We don't endorse any brokerage, but you can go to our Brokerage Center to get information on some of the major online brokerages, including their website addresses. Many will let you open an account over the Internet, although they also will need some paperwork sent in before you can actually begin trading. That's a nice advantage because once you have an account open, you can begin setting up the wire transfer mechanism while the papers are in the mail.

The broker I spoke to said that such accounts are quite common. Capital gains are not reported to the U.S. tax agencies or foreign countries, but in some cases the broker is required by treaty to withhold (and send to the foreign country) income tax on interest and dividends. You can get more information on this directly from the broker you choose.

You might also want to check out IRS Publication 519, "U.S. Tax Guide for Aliens".

Bear in mind, please, that this answer is only from the U.S. perspective. Your country may have other laws that apply and you should definitely check them out. In particular, some countries have limitations on how much their citizens can invest in foreign countries. For example, Canadians must keep 80% of their tax-advantaged retirement accounts invested in Canadian companies.

I am a U.S. citizen living in Japan. Can I use the Internet to trade stocks from here?

Sure. Most of the information above will apply to you as far as setting up the account, but the broker will have to report your stock sales to the IRS for capital gains purposes and you will be subject to U.S. tax laws. The IRS has a publication for you, too -- Publication 54, "Tax Guide for U.S. Citizens and Resident Aliens Abroad."

Where can I go for information on international stocks?

Getting information on companies in other countries can be a challenge. One good way to start is to ask someone who lives there for tips on how to research companies in their country. A great place to develop such contacts is our International Investing messages area. Also try the Foreign Investments folder in the Industry and Market Analysis area.