Can a Foreign National Invest in the U.S.?

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The U.S. stock and bond markets are some of the largest and most liquid in the world, and they attract investors from around the globe. Not only is it possible for a foreign national to invest in the United States, but a great many of them do. There are several ways a non-resident foreign national can set up an account to buy U.S. securities.

Tips

  • If a foreign national chooses to invest in the US markets, they can do so after first establishing either a brokerage account through a local branch (in their country) of a major US brokerage firm or through a US-based brokerage account. That being said, the majority of US online brokerage firms do not currently accept non-resident investors.

International Brokerage Offices

It's not uncommon to find offices from major U.S. brokerage firms in foreign cities around the globe. For people who live in one of those cities, the simplest and lowest-hassle way to invest in the United States is to open an account at the local office and start to buy U.S. securities through it. This way there are no expensive wire-transfer charges, and the broker speaks the local language and understands local investing and tax rules.

U.S.-Based Brokerage Account

Many U.S.-based online brokerage firms don't accept non-resident foreign customers. The reporting requirements to the federal government are too onerous and expensive. However, some firms do accept foreign-based customers, although residents of certain countries might be excluded. The larger brokers with both offices and online accounts are more likely to accept a foreign national account. Brokerages that do accept foreign customers often won't accept an online application from a non-resident. In those cases, paper application with copies of the required documentation must be mailed to the broker.

Non-Resident Account Requirements

Along with the paper application, a broker will ask for several more pieces of information. Expect to send the broker copies of one or more forms of identification, including your passport and locally issued ID. Proof of where you live can be accomplished with a copy of a utility bill. The broker also may require information on the source of the money you will be depositing into the new account. When you want to make withdrawals, the broker may require proof of what the money will be used for.

Better Tax Benefits Than for Residents

The United States does not tax interest, dividends or capital gains earned by non-resident foreigners from U.S. stocks and bonds. To make sure the broker doesn't withhold money for taxes from your earnings, a completed Internal Revenue Service Form W-8BEN must be sent to the broker for each person listed on the account. Foreign investors in the United States might be liable in their home countries for taxes on their investment earnings.

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About the Author

Tim Plaehn has been writing financial, investment and trading articles and blogs since 2007. His work has appeared online at Seeking Alpha, Marketwatch.com and various other websites. Plaehn has a bachelor's degree in mathematics from the U.S. Air Force Academy.