BIL dividend and 15% withhold tax

1

BIL is paying about $0.4 per share per month as dividend and IBKR takes 15% withholding tax.

Here at Switzerland, I wonder should I / must I

  1. declare this dividend as income, and therefore be taxed again?
  2. get back this 15% withholding tax?

Is it like pay a bit more and get a bit back? Do I have the choice to not declare it and not get the withholding tax back? If I do have the choice, is it worth it? If I do not have the choice, is it overall costing more?

And maybe going with BOXX is the better choice?

2

Ibkr should reimburse you the 15% withholding as BIL only holds US treasuries, those are generally withholding tax free, but due to tax laws the distributions from funds get it deducted at first.

You absolutely have to declare it as dividend income in your taxes, everything else is tax fraud.

For stocks and other withholding tax assets there is the DA-1 formula as well, to get back the 15%. This should not apply here.

And yes, for now BOXX is the better fund. It‘s fully tax free gains. Might change in the future, depending on what the guys at ictax think about it.

3

thanks for the reply. So if DA-1 formula doesn’t apply here, What’s the process to get the reimburse? Just start a ticket to ask for the reimburse?

4

It should come later automatically by ibkr.

@nabalzbhf has some specific experience on it iIrc

5

ok cool. it sounds amazing that it will come back later automatically. I thought I would have to chase it.

And could you share some more information about what is subject to 15% withholding tax and what is not? Maybe a link that explains this?

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6

IB usually refunds it in Q1 of following year.

In general dividends are subject to withholding while interests (or interests like eg Treasury bills) aren’t.

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7

ok get it! That’s very clear

8

Just to add a follow up question, so in Switzerland, interest income and dividend income are taxed the same way, same as employment income?

9

Correct.

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10

BOXX is the answer :wink:

11

Well, one important difference between employment income and investment income is that you don’t pay social contributions (AHV and friends) and don’t need to contribute to retirement fund (second pillar).
The latter isn’t a tax but AHV in its form definitely is one.

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