Vanguard, BlackRock ETF Shuffle Lets Foreign Investors Duck US Tax

Vanguard and BlackRock offer exchange-traded funds with nearly identical holdings that allow investors to transfer between them without triggering taxable dividend distributions. The strategy enables foreign investors to avoid the 30% withholding tax on US equity dividends that normally applies under federal law. Investment firms have structured the fund pairs to permit switches that the Internal Revenue Service has not explicitly addressed in guidance.

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