The returns you get from your funds are very important, but if you do not hold these in the most tax-efficient way then you negate some of your gains. The tax situation becomes more complex when it involves funds domiciled offshore, and as this applies to most exchange traded funds (ETFs) one of our readers has asked how to establish the after-tax yield and return he gets on his investments.
As most ETFs listed on the London Stock Exchange are domiciled in Luxembourg or Ireland tax is less of a concern, says Nathan Hall, partner, investment management tax, at KPMG. This is because Irish and Luxembourg taxes are not imposed on the capital gains from these funds or the dividends.
However, if you hold ETFs domiciled elsewhere you may have to pay tax in this jurisdiction.