Can You Trade US Stocks From Outside the US?

Individuals residing outside the United States can trade US stocks. The American stock market is increasingly accessible to international investors, facilitated by advancements in financial technology and expanded brokerage services, allowing access to its vast opportunities.

Selecting a Brokerage for International Trading

Choosing an appropriate brokerage firm is an important step for non-US residents looking to trade American stocks. Several types of firms cater to international clients, including large US-based brokerages with global divisions, local brokers in an investor’s home country that offer access to US exchanges, and online-only international brokers. Each type offers different features, fee structures, and service levels.

When evaluating potential brokers, consider their supported countries to ensure they accept clients from your region. Review the range of investment products available, confirming that US stocks and exchange-traded funds (ETFs) are offered. Understanding the fee structure is another aspect, which typically includes commissions per trade, currency conversion fees for depositing or withdrawing funds, and potential inactivity fees.

A broker’s customer support for international clients is also a consideration, as time zone differences and language barriers can impact communication. Prospective traders must understand the documentation required to open an account as a non-US resident. This typically includes proof of identity (e.g., valid passport or national identification card) and proof of address (e.g., recent utility bill or bank statement). Brokers also commonly request tax identification numbers from the applicant’s country of residence for reporting purposes. Gathering these documents and understanding the broker’s specific requirements is a preparatory step for a smoother onboarding.

Opening and Funding Your Trading Account

After selecting a brokerage, opening and activating a trading account can begin. Most international brokerage firms offer online applications, allowing digital submission of documents. Some may still require physical mailing of signed documents.

Following application submission, the brokerage typically initiates a verification process to confirm identity and residency. This can involve electronic checks or video calls. Account activation timelines vary, generally ranging from a few business days to several weeks, depending on verification complexity and document completeness.

Funding the newly opened trading account from outside the US usually involves international wire transfers. Individuals will need the broker’s bank details, including SWIFT/BIC code, account number, and bank name. Banks may impose fees for international wire transfers, typically $25 to $50 per transaction.

Some brokers may also support funding through third-party payment services, which can offer competitive currency exchange rates and lower transaction costs. These services allow investors to transfer funds in their local currency, which is then converted and sent to the brokerage in US dollars. Verify the broker’s accepted funding options and any associated fees beforehand.

US Tax Considerations for Non-Residents

Non-US residents trading American stocks face specific tax considerations. Dividends paid by US corporations to non-resident aliens are subject to a 30% withholding tax, automatically deducted by the brokerage.

This 30% withholding rate can be reduced or eliminated if the investor’s country has an income tax treaty with the United States. Many tax treaties reduce the dividend withholding rate to 15% or lower. To claim these treaty benefits, non-resident investors must submit IRS Form W-8BEN to their brokerage firm. This form certifies foreign status and provides their foreign tax identification number, allowing the brokerage to apply the correct treaty-reduced withholding rate on dividends. Without a valid W-8BEN, the standard 30% rate applies.

Capital gains from US stock sales are generally exempt from US federal income tax for non-residents, provided the individual is not engaged in a US trade or business. This applies to passive investors. Non-resident aliens should also be aware of potential US estate tax implications. US situs assets, which include stocks of US corporations, are subject to US estate tax if their value exceeds $60,000 for non-residents, with tax rates potentially reaching up to 40%.