Overseas Broker vs Sub-brokerage (複委託)

Two ways Taiwan retail investors buy US stocks

If you want to invest in US ETFs (e.g., VT, VTI, VOO, BND — broad market index products), there are two channels in Taiwan:

1. Overseas broker (海外券商): open an account directly with a US brokerage (Firstrade, Interactive Brokers, Charles Schwab, TD Ameritrade, etc.)
2. Sub-brokerage (複委託): route orders through a domestic broker (Yuanta, SinoPac, Cathay, First Securities, etc.) that places them on your behalf

Both channels reach the same ETFs, but cost structure, convenience, tax handling, and risk differ significantly.

Transaction cost structure

Overseas broker

• Trading commission: most brokers charge $0 commission on US ETFs
• Wire transfer cost: TWD → USD → wire to broker account
  • Bank of Taiwan wire fee: about NT$750 per transfer
  • FX spread: TWD → USD spreads about 0.1%–0.3%
  • Total: roughly US$25–40 per transfer
• Inactivity fee: most brokers have none; only a few Interactive Brokers premium tiers have thresholds
• Other: return wire fee (repatriating money to Taiwan) about US$25–40 per transfer

Sub-brokerage

• Trading commission: calculated as a percentage of trade value
  • Typical range: 0.15%–1% (depending on broker, e-trading vs broker-assisted, promo status)
  • Common "e-trading" rate: 0.15%–0.35%
• Minimum commission: US$15–35 per trade; below that, the minimum still applies
• No wire fee: TWD debited directly, FX conversion done internally by the broker (spread typically 0.2%–0.5%)
• Recurring investment: some brokers offer recurring plans with preferential fees (dropping to 0.1% or a flat fee), but eligible instruments are limited

Costs identical on both sides

• ETF expense ratio: charged by the ETF issuer, unrelated to the broker. E.g., VTI 0.03%, VOO 0.03%
• Dividend withholding tax: the US withholds 30% on dividends to non-resident aliens (Taiwan has no tax treaty with the US), same on both sides

Which situation suits which side

When overseas broker pays off

• Large single-ticket amounts: wiring US$10,000+ in one go into one position — the fixed wire cost becomes a small % of the trade
• Low trade frequency: e.g., year-end bonus or inherited assets deployed all at once
• Long-term holds: avoids repeated wire transfers, no inactivity fees

When sub-brokerage pays off

• Small monthly recurring investments: US$500–1,000 per trade — paying a fixed minimum fee beats a wire transfer
• Prefer keeping assets in Taiwan's financial system: simpler accounts, tax handling, and estate planning
• Don't want to learn cross-border wires or English UIs

Estate tax risk (often overlooked)

This point is very important:

• Overseas broker: the account is in the US. If the holder dies, any amount above the US non-resident estate exemption of US$60,000 is subject to US estate tax (up to 40%). The process is complex and requires hiring a US-based attorney
• Sub-brokerage: the account sits with a Taiwan broker and falls under Taiwan estate tax (遺產稅) law (exemption around NT$13.33M; spouse-to-spouse transfers tax-free)

If your US-listed equity holdings could eventually exceed US$60,000 and you haven't done estate planning, sub-brokerage is clearly superior on this front.

FX spreads and FX risk

Overseas broker

• You control the conversion: you can time the FX (but need to watch markets)
• The buy rate on a Taiwan FX account vs the sell rate on your TWD account differs
• Via online banking (Bank of Taiwan, Cathay, SinoPac) with FX promotions, spreads can come down to 0.05%

Sub-brokerage

• The broker converts internally, typically around the day's spot mid-rate
• You can't time the rate, but you also don't have to worry about it

Tax differences: the Taiwan side

• Sub-brokerage: capital gains are tax-free (Taiwan hasn't implemented a securities capital gains tax); dividends count as overseas income, exempt below NT$6.7M per person per year; above that, AMT filing applies
• Overseas broker: tax treatment is identical. Using an overseas account does not mean paying more tax. This is a common misconception.

Simplified decision flow

1. First, estimate how much you plan to invest per year and how many times
2. Use our Cost Calculator to find the break-even point for your scenario
3. If your asset base may eventually exceed US$60,000, consider sub-brokerage to reduce estate tax risk — or use an overseas broker but set up TOD (Transfer on Death) designation
4. If you have stable monthly salary and want to DCA, and the broker offers promos, sub-brokerage is easier

There's no single best answer. Most frequent-recurring-investment people pick sub-brokerage; single-shot large investors and FIRE crowd often pick overseas brokers. Some use both — small recurring via sub-brokerage, annual bonus via one-time overseas wire.

Disclaimer

This article explains cost structures and does not constitute investment advice, recommendation, or solicitation. Broker selection involves individual risk tolerance, technical familiarity, tax planning, and estate considerations — evaluate independently or consult a qualified professional.