If you're an NRI returning to India, managing your global investment portfolio can feel complicated—especially when balancing foreign assets, tax compliance, and FEMA regulations. One smart and increasingly popular option is investing in Ireland-domiciled Exchange-Traded Funds (ETFs). These ETFs offer strategic advantages for NRIs, particularly during the RNOR (Resident but Not Ordinarily Resident) phase, and even after becoming a full Resident and Ordinarily Resident (ROR).

In this blog, we’ll explain:

• What are Ireland-domiciled ETFs and why they are ideal for NRIs
• Tax benefits for RNOR and ROR individuals
• Best way for NRIs to invest in these ETFs legally and efficiently
• Mistakes to avoid during repatriation and investment via LRS

What Are Ireland-Domiciled ETFs and Why Are They Ideal for NRIs?

Ireland-domiciled ETFs are funds registered in Ireland that offer exposure to U.S. and global stock markets, without being directly domiciled in the United States.

Key Advantages for NRI Investors:

• No U.S. estate tax risk: Unlike U.S.-domiciled ETFs, these are not subject to U.S. estate taxes—crucial for NRI estate planning.
• Global diversification: Access to global markets (including U.S.) through ETFs listed in Ireland or Europe.
• Compliant holding under FEMA Section 6(4): NRIs returning to India can continue to hold these assets legally without needing to repatriate funds.

RNOR Status: Tax-Free Window to Rebalance Global Portfolio

When NRIs return to India, they can claim RNOR status for up to three years. During this time, they are:

• Treated as Indian residents for FEMA
• Treated as non-residents for Indian tax on foreign income and capital gains

Strategic Use of RNOR Status:

• Sell U.S. stocks and shift into Ireland-domiciled ETFs without paying Indian capital gains tax.
• No need to report these assets in Indian tax filings.
• Reallocate global investments without triggering tax in India.

This makes RNOR status the ideal phase to restructure your global ETF portfolio.

Tax Treatment of Ireland-Domiciled ETFs After RNOR Ends

Once your RNOR period ends, you become a Resident and Ordinarily Resident (ROR) in India. From this point onward, Indian income tax laws fully apply to your global income and capital gains.

Tax Rules for Ireland ETFs as ROR:

• Held for more than 24 months: Treated as Long-Term Capital Gains (LTCG) at 12.5% tax rate.
• Sold within 24 months: Treated as Short-Term Capital Gains (STCG) and taxed as per your income tax slab.

Even after RNOR, Ireland domiciled ETF continue to offer global diversification, low tax rates, and no U.S. estate tax risk, making them ideal for long-term investors living in India.

How Can NRIs Invest in Ireland-Domiciled ETFs?

One of the most frequently asked questions by NRIs is—How to invest in Ireland-domiciled ETFs legally and efficiently from India?

Here’s the best route:

Best Practice for NRI Investment:

• Open an Interactive Brokers (IBKR) account using your Indian address (post return).
• Fund the IBKR account from your U.S. bank account or directly transfer assets from a U.S. brokerage account.
• Ensure funds do not touch Indian bank accounts, as that would require FEMA and tax disclosures.

Avoid These Common Mistakes:

• Avoid using LRS (Liberalised Remittance Scheme):
  • Annual limit of $250,000
  • Heavy compliance and paperwork
  • Unused remitted funds must be brought back to India
• Avoid using a U.S. address/IP for IBKR after returning:
  • This may violate IBKR terms
  • Account can be frozen due to mismatch of declared residency and IP address

🇮🇳 FEMA Rules and NRI Compliance: What You Need to Know

Under FEMA Section 6(4), NRIs who return to India are allowed to continue holding foreign assets acquired while they were non-residents. This includes:

• Foreign bank accounts
• Foreign stocks and ETFs
• Real estate outside India

So, if you're in your RNOR window, there's no obligation to bring your funds back to India. You're also not required to report these assets in Indian tax returns, making it a highly tax-efficient strategy.

 Summary: Ireland ETFs for NRIs and RNOR Investors

Planning to Return to India? Optimize Your Global Investments With Us

At Dinesh Aarjav & Associates, we help NRIs, OCIs, and expatriates navigate the transition to India with:

• RNOR tax strategy
• Global portfolio restructuring
• Foreign asset compliance
• FEMA and LRS advisory

With over 25 years of experience and clients across the U.S., UK, UAE, Australia, and Canada, we provide tailored NRI financial advisory services designed to ensure full compliance and wealth preservation.

Contact us today to discuss your RNOR phase, foreign investments, and cross-border NRI tax planning.