Avoid VT if moving to the EU?

Investing / Portfolios
1

I’m starting my investing journey and educating myself on this topic before making a decision. While reading through the forum there’s compelling arguments in favor of investing in VT using IBRK while residing in CH (low TER, diversification, claiming back the withholding tax, etc).

But if the plan is to leave Switzerland within a few years to a EU country where distributing ETF are less tax efficient, I wonder if it makes sense to start investing in VT while in CH instead of an accumulating ETF like VWCE (as example)?

  • Planned investment no more than 20-30k
  • EU national on B-permit (might become C); <30 years old
  • Not sure about the next country (assuming EU); probably moving within 2-3 years
  • Not possible to keep buying VT in the EU
  • Couldn’t find confirmation if claiming the tax back is possible with a B-permit and total dividend amount below a certain threshold
  • Also a chance of relocating to a different canton soon due to job change

Given the circumstances, is it worth the effort to start buying VT now and attempt to claim back the withholding tax? Is there a minimum investment amount that would justify it?

2

With this amount invested you won’t reach a limit of 100 CHF taken as withholding tax per year. You can forget about the return of this tax.

According to my previous estimation, this makes costs of investing in VT more or less on par with VWCE/VWRL.

3

  • Residents of (most, if not all) EU countries will continue to benefit from reduced WHT of 15% through W8-BEN - as well as lower costs of U.S. funds. You will also likely be able to offset foreign WHT against domestic taxes.

  • On the other hand, dividends from other (non-U.S.) countries may be more favourably taxed through Irish ETFs. The overall difference will not be very big.

  • Accumulating ETFs may however be preferable in some (many?) EU countries by deferring taxes on dividends.

In any case: :point_right: You can easily sell your VT shares before moving out of Switzerland and buy accumulating EU (Irish) UCITS funds instead. Without capital gains tax, as an individual in Switzerland - and at very low cost on IBKR. So don’t overthink things.

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