Hello, I am pretty sure probably it is existing somewhere but could someone please briefly explain again what’s exactly the following forms:
-1042S form (IBKR)
-DA-1
-W8-BEN
For which cases are they applicable for and above which threshold makes sense to fill them?
Technically also for ZH canton, Interactive brokers platform and mainly for VT and VOO US ETFs…
Foreign investors holding US shares are normally subject to a US withholding tax rate of 30% on income from those shares (typically dividends). However, as Switzerland and the US have a double tax treaty, Swiss investors are eligible to a reduced withholding tax rate of 15%. Filling out the W8-BEN allows IB to levy 15% WHT instead of 30%. You should fill it out as soon as you hold US shares/ETFs.
The 15% WHT from the US is non-recoverable (i.e., you cannot claim it back from the US). However, Switzerland allows you to claim these non-recoverable WHT from your Swiss taxes and this is done by filling out the DA-1. Note that your tax office will not process any DA-1 with less than 100 CHF of non-recoverable foreign taxes (i.e., you must have earned at least 667/567 CHF of US dividends before/after WHT).
The form 1042-S reports the dividends you have earned and the WHT you have paid in the US as a foreign investor. You can attach it to your tax declaration in CH, but it is usually not required as your tax office will compute everything from ICTax and the trades/positions you have declared. You must however attach a report showing those trades/positions.
Just an addition to this (IIRC) -
You “fill it out” automatically through the IBKR account creation process (by answering some residency related questions); no explicit form to fill as such.
In doubt, you can always go to Account settings > Profile: Your name > Update tax forms (at the bottom of the pop up window).
At the end of the process, if filled correctly, you will have to sign an online substitute for W8-BEN.
Forget about 1042S. It’s a form to report U.S. source income to the U.S. IRS. It will - as I understand it and as it looks for me - not report income from other countries. Which you definitely should report on your Swiss tax return. Even if your only securities and income on your IBKR account are from the U.S., the form is needlessly complex, convoluted and confusing to attach it to a Swiss tax return. The only somewhat useful among IBKR’s “tax forms” seems to be the dividend report to me - though you can finde the same information in other reports/account statements created.
DA-1 is a Swiss tax form (not provided by IBKR) is used for setting off foreign (non-refundable) foreign withholding taxes against your Swiss taxes. When you can’t get a tax refund of withholding tax from the foreign tax administration, you can basically deduct the amount from your Swiss taxes. Note that this is possible for many (but not all) countries, according to applicable DTA, and not restricted to U.S. incomce/dividends.
W8-BEN will allow you a partial exemption of withholding taxes from U.S. securities (i.e. decrease the tax withheld from 30% to 15% on U.S. dividends), if you are a foreign person from the perspective of the IRS. You should definitely file W8-BEN if your online broker supports it and you’re a non-U.S. person/not ordinaraily taxable in the U.S. They will often proactively “bug you” about it though.
To me it sounds like a good proof for withheld tax to justify the US part of DA-1 (of course not for all dividends). That said tax folks are usually happy with the dividend report.
I just glanced over mine - and I can’t even show the security for which tax was withheld?
I had some differences between DA-1report from IB and when I did the calculation manually with ictax.admin data
I also agree that 1042-S is quite useless for us. Dividends are shown in USD, of course, but we have to declare CHF value. If you switch your base currency at IB to CHF and generate a dividend report for a year, all dividend will be recalculated to CHF according to respective daily FX rates.
Using which USDCHF rate?