I’m a newbie on this forum. Starting my FI journey from Geneva. Still discovering the basics. I have started to invest on VTI through IB. Looking at my IB report I am disappointed by the level of quarterly dividend I’m getting. For a portfolio of roughly $ 100 K, I only get $ 250 per quarter or 1000 per year. Very far from the 2% plus I was expecting. I suspect the withholding tax has an impact. But not of this magnitude. Not very attractive if I’m interested in generating passive income.I was looking for a thread explaining that but could not find it and MP has not finished apparently to draft the tax on dividend section of this IB for dummies series.
Thanks for your feedback.
When I look at the distribution from the ESTV site and from the Vanguard site, I can see you would have got a 2% dividend in 2019 if you bought your shares at 145.235 USD.
Whitholding tax would be 15% of that ammount if you filed the W8-BEN, so you still would get 1.7%.
I can’t really tell you anything more with the informations you provided.
Do not think that the dividend are the same all year long. They will rise
Also this year might be a bit special…
Also don’t forget that dividends are irrelevant
Reinvest the dividend.
Thanks guys for all your answers. Forced me to look deeper into it. it appears that IB proactively tax my dividend at 30% or so. Half of it I need to get it back from Swiss authorities. Let me look now how to do it
US withholding tax is only 15% for swiss residents, not 30%. You probably filled your W8-BEN incorrectly.
You reclaim the 15% on your swiss tax return, in Zurich by filling out DA-1 form.
Inded thanks I need to fill my DA-1 form. Seesm to be a challenging task in itself. Looking now for a tuto on the forum on how to use IB reports to get the required information
You fill it in exactly the same way as you fill Wertschriftenverzeichnis. There’s just two extra columns you have there:
- additional withholding by swiss brokers - this is easy, $0 as IB is not a swiss broker
- refund rate - also easy, 15% for US.
Thanks @kilyn I probably should not say that but I have never filled the Wertschriftenverzeichnis. Let me look into it and revert back if I have any questions