Last year I started investing on IB , so far I only purchased Vanguard VT US ETF. I hold permit B, which means that I’m taxed at source (Quellensteuer).
Does anyone have any experience and would be able to tell me if I should declare my dividends I’m taxed at source? And if so is there any way to only declare dividends since I have been already being taxed monthly on my income (full time job)
I checked my IB account and 15% withholding US tax was already applied to my received dividends.
There is an income tax treaty between Switzerland and the US, so presumably I should only pay taxes once.
Am I correct that now I need to declare my foreign dividends to Swiss tax authorities, then I pay another 15% tax on this, and after I file the DA-1 form to claim back the foreign tax (15%)?
If so this seems unnecessary complicated. Is there any way to declare foreign dividends to the Swiss Tax authorities and inform them at the same time that the foreign US tax was already paid to avoid additional paperwork?
If you’re earning less than 120k/yr, you’ll probably want to apply for “retroactive ordinary assessment” (nachtraegliche ordentliche Veranlagung), that way you’ll get to deduct any payments to second/third pillars, insurance, GA travelcards and other deductions from your taxable income. If you earn more, you’ll be automatically asked to fill out the full tax declaration.
Should you declare them? . . . Absolutely. The double-taxation agreement between CH and US is quite solid so you’ll be only taxed once.
The latter is definitely not possible. Either you fill out a full tax declaration or you don’t declare anything, depending on your situation.
If your salary is >= 120k, there is no choice. You’ll get an ordinary tax declaration where you must declare worldwide income and assets.
If your salary is lower, it depends on how high your dividend income (and other income not taxed in Switzerland) is and in what canton you live. E.g. in ZH if your untaxed income is >= 3k a year (or your taxable assets are >= 80k), you need to request ordinary tax assessment and have no choice.
If your salary, your untaxed income and your assets are all below the thresholds, you can choose whether to request ordinary tax assessment. It depends on your municipality, your untaxed income and your deductions, among other things, whether ordinary tax assessment would be beneficial or not. To get an answer, you either have to use a tax calculator (may not be precise enough) or use tax software (e.g. ZHprivateTax demo) to calculate the expected ordinary taxes and compare this with your current tax deductions.
Keep in mind that you can never switch back after requesting ordinary tax assessment. You’ll have to do a full tax declaration in all following years as well.
You essentially have to pay Swiss income taxes (which may also be higher or lower than 15%) on your VT dividends and get a tax credit for the 15% US WHT. However, if your Swiss tax rate is below 15% (exact calculation has a bit of complexity), you only get a tax credit for the lower rate, as this is only a double taxation relief. I.e., in the end you never pay less than 15% because that’s how much the US takes. And the minimum tax credit for DA-1 is CHF 100. As long as your US WHT is below CHF 100, you can’t use DA-1.
I believe my canton‘s tax software asks me if I would like to import positions from the securities statement (Wertschriftenverzeichnis) into form DA-1/R-US.
…unless other non-refundable WHT was deducted to reach the minimum amount - which could be in on other securities, in other countries, and/or held elsewhere (just to clarify).
If your salary is lower, it depends on how high your dividend income (and other income not taxed in Switzerland) is and in what canton you live. E.g. in ZH if your untaxed income is >= 3k a year (or your taxable assets are >= 80k), you need to request ordinary tax assessment and have no choice.
Apologies, but would you be able expand on this? What do you mean ‘…and other income not taxed in Switzerland’. Would it include a property I own in another European county, which I currently rent out and use the money to repay for mortgage (taxes for this are being paid there as well)
Also what is the difference between untaxed income vs. taxable assets. Would my savings from regular salary be considered taxable assets whereas dividends would be considered untaxed income (as long as below 3k)?
And the minimum tax credit for DA-1 is CHF 100. As long as your US WHT is below CHF 100, you can’t use DA-1.
My US WHT are just below CHF 100. All in all, my dividends are only a few hundred CHF, not a large number, I just want to make sure it’s declared and the authorise are aware of my foreign investments.
While foreign real estate has to be declared in Switzerland when filling out your tax declaration, it is not taxable in Switzerland (but is still used to determine your tax rate). As it isn’t taxable here, I wouldn’t expect it to count towards the thresholds, however, I’m not completely sure.
Yes, with ordinary tax assessment, you have to pay wealth taxes on your total net worth as of December 31 of the tax year. This includes bank accounts, cash, investments, cryptocurrency, cars, properties less mortgages and other debt. The main exceptions being household and personal effects and foreign real estate (again, not taxable in Switzerland but still affects the tax rate). There is a tax free amount, though (canton-specific).
I.e., if your non-employment income (such as foreign dividends) and/or your net worth at the end of the year exceed the corresponding thresholds, you need to request ordinary tax assessment and file a complete tax declaration. As per above, I’m not completely sure whether foreign real estate (income and equity) counts towards the thresholds. My guess would be it doesn’t. The tax office of your municipality should be able to answer that question.
Any source on the threshold amounts? I’m looking for similar thresholds for untaxed income in Vaud, Lausanne specifically but can’t find any mention of it.
I could only find the threshold of CHF 56’000 for wealth.
I don’t see an income threshold for VD either. You could send an email to the tax authority of Lausanne. If you’re below the wealth threshold, your dividend income is likely below CHF 1’000 or only slightly above, in which case I would probably not bother. If your untaxed income is more significant, I would ask.
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