That’s the whole point of the DTA, it makes it 15% either way, there’s no difference (the difference is refunded for US residents).
We’re talking about stability and following existing negotiated treaties (e.g. DTA). If you think any kind of tax is not ok then yeah…
Sorry for being blunt, but:
Two little tips from me:
Avoid relying on single time series to make financial planning decisions. Things could have gone differently at many points in history and things could not repeat themselves.
45 years isn’t a lot of data when it comes to financial planning. That’s one of the problem we have: finance and the economies have evolved a lot in “recent” times (think central banks and the digital economy) making older data hard to rely on but yet, if we exclude it completely, then we end up with very little data/independent time series. So no matter what we do, we have to put data into context and apply our judgement to it (which will vary from person to person/what we value).
.
This to say that if you criticize something with an exclamation point, please make sure not to fall yourself into the same bia. 45 years isn’t “as much data as possible” by a long shot.
In order to keep focus on original question.
Question was is 70% allocation to US stocks too high if we focus on Equity portfolio of OP. It was not about US outperformance.
I think the answer seems to be one of the following
What’s your answer ?
Plotting history is not much relevant. We all know how we for here which is US outperformance (for various reasons- debt, valuation, passive flows from pension funds, zero interest rates, tech, geo politics etc)
P.S -: I am partially responsible for deviation from topic
I’m not sure I understand. The tax is deducted and has to asked back. Does that mean an U.S. investor gets only discounted 15% on Swiss dividends while a Swiss investor gets discounted 35%? I hear of non U.S. or Swiss citizens that have a hard time to get back the 35% of Swiss tax because the needed certificates are expensive.
I get back only the lower part which is somehow even lower due to debt interest.
No, that is not what I said. I said it is needed but it is expropriation.
No, it is not. But I’m afraid I don’t have much more. I hope I make a difference with my style of investing, but that I did does not proof anything, too little data. Taking into account that only about 2% of stocks were responsible for all the gains the relevant data even shrinks.
But still, comparing two regions you will always find a period where one performed better than the other; the smaller the period the less it means.
Back to the subject: I would and will not reduce U.S. investments.
Ok, that’s turning into a political opinion let’s stop here.
Yes a US investor will be refunded 20% after filing some paperwork. (and a Swiss investor will be credited towards their tax which is why it’s called “anticipated tax”, the 35% are an incentive for people to declare their income, it was introduce to fight tax evasion).
But anyway that’s besides the point. My point is that with things like section 899 the US is breaking the trust in the international agreement it made (all the DTAs where countries neutralized the withholding tax). That’s a big departure from being a trusted partner.
I’m sorry, this should not drift into politics. As I said, it is very expensive to ask back this tax for non-Swiss residents due to the high costs of the certificates needed. My original point still stands, Switzerland charges 35% and the U.S. charges 15%. Then I have to ask it back (and don’t get it for various reasons) or they have to ask it back (or don’t do it because it is too expensive). There is a difference of 133% and that is not fair.
Withholding tax on Swiss entities has been a challenge for Swiss domicile products. It’s known fact and industry would love to get this reduced
But I think we are talking about different things. We need to differentiate between countries following the law (whatever it is) and countries changing the laws on the fly.
The regular US withholding taxes are 30%, fairly close to Switzerland’s 35%. If you have a broker with such a 30% deduction (or don’t file the W-8 BEN or equivalent), you have to claim 15% back from the IRS, which is cumbersome, similar to the pain of US residents claiming back 20% from Switzerland’s tax authorities.
The main difference is that the US has the IRS Qualified Intermediary regime, which allows brokers to act as an intermediary, reducing the US withholding tax to the treaty rate. Lots of brokers are IRS QI nowadays as a lot of customers want to invest in US securities, but it wasn’t quite as common some years ago.
It would be nice (for non-Swiss residents) if Switzerland had a similar regime but I don’t know how many international brokers would sign up for this unless there was some international standard that reduces the per-country effort to a minimum. (It may also be difficult for Switzerland to introduce this with the current process of Swiss withholding taxes).
I don’t think this is intentionally unfair, but in practice it’s still a pain for investors.
Many thanks for that, best article on that subject, explains a lot. Not intentionally unfair, but still unfair… 
And another reason to stay in the USA with my investments.
The US taxation at source is 15%. If you use a Swiss broker, the broker collects an additional 15% US withholding tax (if you use an non-Swiss broker like IBKR, it doesn’t collect the 15% witholding tax).
If you have filled out your W-8 BEN and declare your holdings in the DA-1 Swiss tax form, you’ll automatically get back the 15% (or the 30% with a Swiss broker) or they are counted towards the taxes you’ll have to pay for the given tax year.
In the canton of ZH you get the money back fairly quickly after filing the taxes even if the tax authorities have not finalized their examination of your tax return. E.g. I filed my 2024 taxes in Feb 25, got the money back in March (15% for my US holdings at IBKR, 30% for my US holdings at Swissquote) and to this day still have not received my final 2024 tax bill.
They meant the non-DTA rate, default is 30%.
This only applies to brokers that are IRS Qualified Intermediaries with W-8 BEN on file for Swiss tax residents (and tax residents of various other countries). The standard US withholding tax rate is 30%.
Swiss brokers that are IRS QI (which all the popular ones are nowadays, as far as I know), the broker still only collects 15% US withholding tax. The additional 15% are sent to Swiss tax authorities, not the US.
Swiss brokers that aren’t IRS QI (or where there is no W-8 BEN or equivalent) collect 30% US withholding tax, which is different from the above 15%+15%.
I missed the point that we were discussing things for non Swiss tax residents, sorry for the noise.
Would be nice to have international standards (tho some people would further complain about the bureaucracy and further KYC/AML burden) indeed.
That said if you invest in funds and not single stock, you probably don’t have to care as they’ll recover the tax for you. E.g. EWL (MSCI Switzerland in US) seems to have 15% withholding in practice.
The part that goes to the Swiss tax authorities is a proper tax credit, right? You always get that money back, even if your average tax rate is 0%?
Contrary to the part held back by the US tax authorities, where the credit depends on your average tax rate.
@jay is the expert here, I think.
I believe you’d get back the withholding tax even if your tax rate is 0. The taxation at source is gone for good.
Yes. And, at least in ZRH I am not tax-bill-credited the witholding tax and the taxation at source, that money actually is wired to my bank account (where I usually wire it back shortly after to the tax office for paying a good part of the taxes still owed).
that’s correct
Yes, you always get a full refund of the 15% additional Swiss withholding, assuming you file a proper tax declaration with evidence that the broker deducted that additional withholding. Very similar to the regular 35% Swiss withholding for Swiss securities. Depending on the canton, it may be directly paid out or deducted from your tax bill.
Yes, the Swiss tax credit for foreign withholding taxes is quite different from the refund of Swiss withholding taxes.
I am grateful for the entropy you added to the responses. Super instructive!
Should be available - mine has a strategy paper where min and max of each asset class is stated and an actual allocation document (dated specifically) where all the holdings are listed (which funds etc.). As far as I know these documents are mandatory.