[Broker Choice] Details on brokers

thanks for this info! great!
i am fully aware of the severely decreased costs of IB^^

i guess you contacted the customer support for that? i have not found any baccording buttons or such

I went to IB’s Account Management Home page, ‘Funding/Position Transfers’ and started the process there. Then, as advised, I contacted my account manager at CT to let him know I’d be transferring my positions to IB and that he’d be contacted by IB soon.

@Mobius how quick was the process?
(At Simplewealth, we have clients asking us for full transfer but we are a bit hesitant to mention this option until we know the process is quick!)

It took longer than usual because apparently CT dropped the ball and I had to remind them, but looking at the records it took 3 days to become available after I delivered the transfer form to CT.

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Hi @hedgehog, in 2018 I’m thinking about buying US ETFs which invest in non US markets (i.e. VEA).

In this case, according to your experience, does US withhold 15% taxes like - say - VTI ? If so, are these also reclaimable filing DA-1 ?

if, after reading this post, you still have the same question, then let me know what should be improved about this post

I know your wiki topic, which improved over time and which I find a valuable resource. I usually try to do my homework before asking but I didn’t find an answer to this specific question; maybe you can point me out to the right chapter ?
In this case, as I’m still struggling to decide - for the exUS portfolio part - if going with an IE or US ETF (the latter being cheaper to buy and broader diversified) I’m especially interested in real life experiences (as I also asked here: Tax optimisation for ETF investing )

ha ok :slight_smile:

the 15% witheld by he US IRA when owning through IB is regardless of the underlyings, as long as the fund is domiciled in US. for VTI as for VEA. and yes, they in both cases th DA-1 procedure should do it’s job (can’t tell from experience)

the only hidden difference is that for VTI, nothing else is deducted on the way to your account. for VEA, all non-US-companies might be in countries that withhold some % themselves - the example VWO vs. VFEM estimates 11.5% vs. 9.4% - a small difference.

under the bottom line, if you successfully file DA-1, VWO is cheaper than VFEM. dunno for VEA vs. ??

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@weirded: I guess what you’re asking is: why should one buy something like VXUS over an Irish alternative.

  • The withholding taxes of the countries where the constituents are domiciled will be the same
  • The withholding tax of the ETF will be 15% in USA (W8BEN) and 0% in Ireland. This tax you will be able to reclaim at your Swiss tax office, so it may be that you don’t pay more in the end.
  • The Irish ETFs have lower liquidity, lower availability and higher TER. There is even no good equivalent to VXUS, which I find strange.
  • If you’re not in Switzerland, or not in a country with this special agreement with USA, your withholding tax will be 30% and you will not be able to reclaim it. For these kind of people exist these Irish ETFs, I think.
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@nugget @Bojack thank you for your detailed answers. Everything clear. :blush:

After reading the post and all the content here I still have a question.
My understanding:

  • US Domiceled Funds/ETF Dividends are taxed 30%.
  • Once you file W8 then you reduce to 15%
  • Once you file DA-1 you get the 15% back (or ist is valid only if using a swiss bank?)

I’ve filled the DA-1 but my request was declined.

The reply from the swiss tax officer (SG) was that as IB is not a swiss bank but an english one and they don’t return the 15%. Original in German: “Note: kein zusätzlicher Steuerrückbehalt, da keine Schweizer-Bank - die engl. Interactive Brokers London rechnet keinen zusätz. Steuerrückbehalt ab!”

I’ve added the reports, so they could see that some withholding taxes were paid.

Any chances to get this 15% witholding taxes back? Or is my understanding wrong and I cannot get this back?

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On the DA-1 did you insert 15% in both columns - “berechnung pauschaler Steueranrechnung” and the “Zusätzlicher Steuerrückbehalt USA”?
For US shares at Swiss brokers 15% goes in both columns, & is the first is credited and the second is refunded.
For US shares at IB the “Zusätzlicher Steuerrückbehalt USA” didn’t get subtracted at IB (because it’s a Swiss thing), so you don’t put this on DA-1.
The amount in “berechnung pauschaler Steueranrechnung” (15%) should get credited to your next tax bill though, due to double taxation agreements US-CH.

You may have mixed up the two columns? Then the tax guy was being a bit inflexible but kinda correct. The value should be in the “berechnung pauschaler Steueranrechnung”.

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You are right! I’ve mixed up the two columns.

I let the column “Betrag für pauschale Steuerrechnung” empty and have added the values on the column “Zusätzlicher Steuerrückbehalt USA”.

So I am going to correct it and send again.
Thanks!

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I am using Degiro and I have invested 30k CHF all in Vanguard ETFs. From January I am planning to invest 70k more for a total of 100k, again all in Vanguard ETFs.

My understanding is when one reaches an investment of 100k USD Interactive Brokers is always a better broker to choose.

I am worried about what happens if IB fails (as in goes bankrupt) will my investment be lost? Or am I protected by SIPC ? Does Degiro has a similar protection? Finally, does the broker choice has any impact on how the US estate tax is applied?

Thanks!

I don’t see how it would have an impact.

Theoretically the broker is irrelevant for the US estate tax topics, it’s the assets that determine this, i.e. shares of US companies etc.
However a US broker for example may be more pedantic re proof that no estate tax is due than a non-US broker.

Inactivity Fee eliminated at Interactive Brokers.
So even for <100k invested IB does not cost $10 per month any more.
This fee was a certain disadvantage for people with not so much invested and/or slow equity growth rates.

"While many of our clients actively trade or maintain substantial equity in their account, we have decided to eliminate our monthly inactivity fee so there are no impediments to maintaining an account with IBKR.

Effective July 1, 2021, you will no longer be charged USD 10 for not maintaining a minimum balance or transaction activity"

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Seems @ma0 beat me by 10 minutes :wink: I’ll leave my message here in the Broker details thread regardless.

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This is a really good news as I would have to pay those 10$ for the first time on July 2021 (opened an acount in March 2021 - 3 free months).

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that’s good news about the minimum fee. :slight_smile:

I read on the IBKR website that they have a referral program mentioned in their FAQ:

https://www.interactivebrokers.eu/lib/cstools/faq/#/content/121296038?articleId=32663939

Anybody knows if this is still active for the IBKR Luxemburg. If I understand this correctly, both, the referrer as well as the referred would benefit from this. I’m thinking about opening a new account.

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