Yes, foreigners can invest in US stocks. No federal securities law bars non-citizens from owning shares in American companies, and most major US brokerages accept international clients. What varies is the paperwork, the tax withholding on dividends, and an estate tax exposure that catches many foreign investors off guard.
Who Is Actually Blocked
The SEC regulates the markets and FINRA oversees brokerage conduct, but neither restricts access based on nationality. Individual brokerages decide which international clients they will take, so the practical experience of opening an account varies by firm.
The real hard barrier is sanctions. The Treasury Department’s Office of Foreign Assets Control maintains comprehensive sanctions against Cuba, Iran, North Korea, and Russia, along with the Crimea, Donetsk, and Luhansk regions of Ukraine. Most financial transactions involving those jurisdictions are blocked unless OFAC issues a specific license. If you are a citizen or resident of a comprehensively sanctioned country, virtually no US brokerage will open an account for you. Other countries face narrower, targeted sanctions aimed at specific individuals or entities rather than a whole population.
A separate category of restrictions caps how much stock foreign investors can collectively hold in certain industries. US airlines must be at least two-thirds controlled by American citizens on their boards. The Communications Act limits direct foreign ownership of broadcast and telecom licensees to 20% of equity or voting interest, rising to 25% for an indirect parent. Nuclear energy licensees face similar limits under the Atomic Energy Act. These caps almost never affect an individual retail investor buying shares on the open market, but they explain why some defense and infrastructure companies disclose foreign ownership levels in their filings.
What You Need to Open a Brokerage Account
Expect to provide a valid passport as your primary identification. Brokerages typically also ask for proof of a residential address outside the US, such as a utility bill or bank statement, and either a Social Security Number or an Individual Taxpayer Identification Number (ITIN) for tax reporting.
The central form is the W-8BEN, the “Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting.” Filing it does three things: it establishes that you are not a US person, identifies you as the beneficial owner of the income, and, when applicable, claims a reduced withholding rate under a tax treaty between your country and the US. Without a valid W-8BEN on file, your brokerage must withhold tax at the full 30% rate on all distributions.
Part I of the form collects your legal name, country of citizenship, permanent residence address, and the foreign tax identification number issued by your home country. Part II is where treaty benefits get claimed. You identify the country whose treaty you are invoking, the specific article and paragraph, the withholding rate it provides, and the type of income it covers. Getting Part II right matters because the difference between 30% and a treaty rate of 15% or 0% compounds significantly over a long holding period.
How Long the W-8BEN Lasts
A W-8BEN generally remains valid from the date you sign it through the last day of the third following calendar year. A form signed in March 2026 expires on December 31, 2029. If your brokerage does not receive an updated form before the old one lapses, withholding reverts to the full 30% statutory rate.
Certain life changes trigger early expiration. Moving to a US address, becoming a US citizen or resident alien, or meeting the substantial presence test all invalidate your existing W-8BEN. You have 30 days from the date of the change to notify your brokerage and submit a new form.
Getting an ITIN
If you do not have a Social Security Number and your brokerage requires a US taxpayer identification number, apply for an ITIN using Form W-7. A valid passport is the only standalone document that proves both identity and foreign status. Without one, you need at least two other qualifying documents. Processing takes about seven weeks, stretching to nine or eleven weeks if you file between mid-January and the end of April, or from overseas. You cannot e-file a return in the calendar year your ITIN is first assigned.
Dividend Withholding at 30%
The US imposes a flat 30% tax on dividends paid to non-resident aliens. It applies to the gross dividend and is withheld at the source by your brokerage before the payment reaches your account. You never see the withheld portion, and you do not file a US return to pay it, because the obligation is satisfied through withholding.
Tax treaties between the US and dozens of other countries reduce this rate, often to 15% and sometimes to 0% for certain types of income. The treaty rate only applies if you have filed a valid W-8BEN claiming the benefit. If your form expires or contains errors, the brokerage must withhold the full 30%, and recovering the excess means filing a claim with the IRS after the fact. Keeping the W-8BEN current is the single easiest way to protect your returns.
Capital Gains: Usually Zero
If you spend fewer than 183 days in the US during the tax year, your gains from selling US stocks are not subject to federal income tax. This exemption is one of the main reasons international investors favor US equities for growth-oriented strategies. All of the upside from share price appreciation stays in your pocket rather than being reduced by withholding.
The 183-day rule here is separate from the substantial presence test that determines general tax residency. Even if you do not meet the substantial presence test, you can still trigger capital gains tax if you happen to be physically present in the US for 183 or more days in a single tax year. In that case, the IRS imposes a flat 30% tax on your net US-source capital gains, unless a treaty provides a lower rate. Some investors assume non-resident status automatically means no capital gains tax. It usually does, but long visits to the US can change the math.
Resident Alien or Non-Resident Alien
The IRS splits foreign nationals into two buckets, and the distinction controls almost everything about how your investment income is taxed. Resident aliens are taxed on worldwide income, the same as US citizens. Non-resident aliens are taxed only on income from US sources.
You become a resident alien by holding a green card or by meeting the substantial presence test. The test uses a weighted formula covering three years: every day of physical US presence in the current year, plus one-third of the days from the prior year, plus one-sixth of the days from the year before that. If the total reaches 183 or more, the IRS treats you as a resident for tax purposes. For an investor still living abroad, staying under that threshold keeps foreign income and foreign holdings outside the US tax net.
The Estate Tax Trap Most Foreign Investors Miss
This is where foreign stock ownership gets genuinely hazardous. When a non-resident alien dies holding shares in US corporations, those shares are treated as property situated in the United States for federal estate tax purposes. The estate must file a return if the value of US-situated assets exceeds $60,000, a threshold that is not indexed for inflation.
For comparison, a US citizen or resident can shield roughly $7 million from estate tax in 2026 following the scheduled sunset of the Tax Cuts and Jobs Act’s higher exemption. A non-resident alien gets $60,000. The unified credit available to non-resident estates is $13,000, which offsets only the tax on the first $60,000 of US assets. Everything above that is taxed at graduated rates climbing to 40% on amounts over $1 million. A non-resident alien with a $500,000 US stock portfolio could leave heirs facing a six-figure estate tax bill that no one planned for.
Tax treaties can help. Some bilateral agreements let a non-resident’s estate claim a prorated share of the full US unified credit, based on the ratio of US-situated assets to the decedent’s worldwide estate. If your country has such a treaty, the effective exemption can be substantially higher than $60,000. Not every country has an estate tax treaty with the US, and the ones that exist vary in their terms.
Some foreign investors structure their US holdings through non-US corporations or certain types of funds to avoid direct ownership of US-situs assets. These structures add complexity and cost, but for portfolios well above the $60,000 threshold, the estate tax savings can outweigh the setup expenses. For a significant US stock position, this is worth raising with a cross-border tax advisor before the portfolio grows large enough to create a problem.