Bloody lesson! Hidden costs of US ETFs: tax rate + dividend withholding tax are the real profit killers💥

Mainland investors buying US ETFs, don't just focus on NAV growth! Many people's earnings are quietly eaten away by tax rates + dividend withholding taxes. These two hidden costs are the real money drainers. If you don't understand this, you're working for nothing!

The costs of US ETFs are never just the visible management fees. Tax rates and dividend withholding taxes lurk in the shadows, directly reducing actual returns. First, dividend withholding tax: the US imposes a default 30% withholding tax on non-resident investors. Even if you only receive $100 in dividends, you'll immediately lose $30 - that's no small amount! Fortunately, the US-China tax treaty allows this to be reduced to 10% by filing a W-8BEN form. This step is absolutely necessary - otherwise you're just giving money away. Note the form expires every 3 years and must be updated on time, or the higher rate will apply again.

More importantly, this withholding tax is a fixed cost - regardless of how long you hold or whether you're profitable, as long as the ETF pays dividends, it will be withheld. Don't think about tax evasion either - brokers strictly follow the rules. You'll need to keep the 1042-S tax certificate for domestic tax filing to avoid double taxation. Missing any step could cost you more.

Combined with the ETF's own expense ratio, the double whammy becomes more obvious. For example, if you invest 100k in a US broad-market ETF with 0.3% annual fee + 10% dividend withholding, your hidden annual costs are much higher than you think. Without the tax form, 30% withholding + high fees could create a huge performance gap over time. Many people see 8% annual returns but only net 5% after costs - all because of these hidden expenses.

Mainland investors buying US ETFs must do the math to protect returns: 1) Choose low-fee ETFs (preferably 0.2%-0.5%); 2) File W-8BEN to reduce withholding tax; 3) Hold long-term to minimize trading costs. All three are essential. Don't be fooled by surface-level returns - only by controlling hidden costs can you truly keep what you earn!

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