Buying an US ETF from Europe using Interactive Brokers

Question

I am trying to buy an ETF using my account in Interactive Brokers.  I am surprised to see that it is not possible.  I am living in Europe and trying to buy an ETF in US dollars.

Their response to me:

UK Retail clients are restricted from trading in US ETFs. Opening
  orders from retail investors residing in the European Economic Area
  (EEA) who attempt to enter an opening order that are associated with a
  product that does not comply with the EU's Packaged Retail and
  Insurance-based Investment Product Regulation (PRIIPS) will be
  rejected. The regulation is intended to enhance understanding of these
  products through the provision of disclosure documentation. This
  documentation is referred to as the Key Information Document (or
  "KID") which. The KID provides information such as product
  description, costs, risks & performance.

This seems to be a new regulation for EU citizens.  Anyone else face this issue?  What would be the best route for buying into an ETF as a person living in Europe?

Amanda Debler · Answer

If you have only EU/UK tax residency, you can buy any ETF with "UCITS" in the name - those conform to the new consumer information regulations. I gather that the expense ratios often aren't quite as favorable as the US domiciled ones, but I would do it anyway. Here are some that track the S&P 500: https://www.justetf.com/gb-en/find-etf.html?assetClass=class-equity&country=US&index=S%2526P%2B500%25C2%25AE

On the other hand if, like me, you are a US citizen residing in the EU/UK, do NOT buy an ETF that is not domiciled in the US. Why: https://thunfinancial.com/home/american-expat-financial-advice-research-articles/american-expat-pfic-uk-non-reporting-fund-investment-trap-article/

I'm currently looking for a solution for myself and will post a follow-up comment here if I find one any simpler than DIY direct indexing.

cbeleites unhappy with SX · Answer

I see 2 possibilities:

The justETF post in your link suggests that it may help to get yourself listed as "experienced investor" to get access to these ETFs via your European broker. I'd certainly ask them.
The second possibility is to open an international brokerage account in the US. That would also avoid a currency conversion every time you do anything. Conversion happens only when you wire money between your USD and EUR/GBP/... account.

You'll have some tax bureaucracy getting non-citizen non-resident tax status but something along those lines would probably also be needed when buying the US ETF at your domestic broker.

D T · Answer

Tradestation allows buying US ETFs by EU residents but their commission is higher than IB (5$ in/out trade).

MH512 · Answer

I was recently informed by customer service at IB that you are allowed to keep the underlying if your options are assigned ! But make sure your underlying are HMRC reporting! https://www.bogleheads.org/wiki/Vanguard_US_domiciled_ETFs_that_are_HMRC_reporting_funds , and you have enough cash/ margin to buy 100 x ETF.
Therefore, sell some ATM (or slightly OTM) puts in VOO (or similar), collect the premium , collect 100 shares of ETF on assignment!
Can anyone else confirm this?
https://www.gov.uk/government/publications/offshore-funds-list-of-reporting-funds

Buying an US ETF from Europe using Interactive Brokers

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