Tax

There is no typical tax rate on iShares investments, as each client has his or her own unique tax status. Shareholders may be subject to taxation in their home jurisdiction on distributed income, undistributed income, realised capital gains and unrealised capital gains and any other clients from their investment in iShares funds.

iShares products listed on the LSE are domiciled in Dublin. For UK individuals, the UK tax authorities consider the income paid out by the Dublin iShares funds to be a foreign dividend/distribution subject to dividend tax rates, irrespective of the investment profile of the iShares fund itself.

ISAs/SIPPs

Under current ISA regulations, all Dublin-domiciled iShares funds are eligible investments for an ISA wrapper or SIPP. However, no US-domiciled iShares funds are eligible for inclusion in an ISA and only the UCITS-eligible funds in the German iShares

EU Savings Directive (EUSD)

The purpose of the EUSD is to eliminate international tax evasion by EU residents, summarised by the directive as ‘to enable savings income in the form of interest payments made in one member state to beneficial owners resident for tax purposes in another member state to be made subject to effective taxation’.

How are iShares funds affected by the EUSD?

Returns (distributions, redemptions and secondary market sale proceeds) from investing in an iShares fund could be subject to tax under the EUSD, provided certain conditions are met:

            -        The fund holds bonds – (fixed income iShares are impacted by the EUSD).
            -        The investor’s investment is held with an intermediary (bank / broker / custodian) in either: Austria, Belgium, Luxembourg, Switzerland, Guernsey, Jersey or the Isle of Man.
            -        The investor is resident in a different EU jurisdiction to the intermediary
            -        The investor has not elected to have their income reported rather than taxed

The tax is calculated and deducted by the intermediary. For the Dublin-domiciled and German domiciled funds this can be done using information provided by the fund administrators about the fund’s income. However, this information is not available for funds domiciled in any other jurisdiction. In such cases, the relevant defaults specified for the intermediary’s jurisdiction would apply and tax would be deducted on this basis.

We would advise you to consult your own tax advisor to ascertain your individual tax situation.