Non-US Investing • Dividend tax withholding on US Treasury UCITS ETFs

I came across this Vanguard article: https://www.vanguard.co.uk/professional ... ucits-etfs

It introduces several new US Treasury bond UCITS ETFs with different maturities (1–3 years, 3–7 years, and 7–10 years). Since they’re UCITS, they seem great for European investors and make investing in US Treasuries much more convenient.

I’m trying to understand how dividend withholding tax works for these funds. My current understanding is:

• For non-resident aliens (NRAs), US-domiciled ETFs generally have a 30% dividend withholding tax (or 15% with a treaty).

• For NRAs, US-domiciled ETFs that hold only US Treasuries (e.g., SGOV) have 0% withholding on interest distributions, since Treasury interest isn’t subject to NRA withholding.

• NRAs can also hold individual US Treasuries through brokers (not TreasuryDirect), also with zero withholding, though many people would prefer ETFs over individual bonds for simplicity.

• For UCITS ETFs in general, I’ve read that many apply an internal 15% withholding on US-source dividends due to treaty rates (correct me if wrong here, I'm not very confident about this).

My question is this: For UCITS ETFs that hold only US Treasuries (such as the aforementioned Vanguard’s new products) is there any internal withholding? Do they still face the usual hidden 15% treaty-rate drag that equity UCITS funds have, or are they treated differently because Treasury interest is exempt from withholding?

If anyone has sources on this, I’d appreciate it.

Statistics: Posted by Stokes Hoelder — Wed Nov 26, 2025 12:24 am — Replies 0 — Views 67

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