ETF tax complications, moving from Ireland

Hello Everyone, :blush:

Firstly, I would like to say this forum has been invaluable in terms of knowledge I have gained over the past number of weeks. :slightly_smiling_face:

My quick story; I’m 30 yrs old from Ireland and I have just moved (hopefully long-term) to Zurich. I have been thinking about investing my savings but because of COVID and other personal circumstances it got postponed until now as I turned 30 and it made me thing about the future even more (from financial point of view).

I have been paying taxes in Ireland for 5 years now since I graduated and January is my last month in my current job in Ireland and I start new one in Zurich in a few days. I already opened DeGiro account and I had to provide residence for tax purposes (Ireland).

So I have approx. €40k saved, of which €20k I would be happy to put into a long term investment. My initial plan was to put it all into ‘Vanguard FTSE All-World UCITS ETF USD Acc’ (Irish Domiciled) and contribute around 1-2k a month to start with.

Now the more I read about investments the more I’m convinced that Ireland is a great place to invest your money, unless you live in Ireland… Any dividends and capital gains from an Irish / EU / EEA domiciled ETF are subject to 41% tax, which is an absolute joke. For that reason, since I moved to Switzerland already, it would make perfect sense if I paid taxes on any investments in Switzerland and not in Ireland.

My questions are: if I started investing now (after I changed my residency to Switzerland in DeGiro) would my capital gains / dividends be subject to tax in Ireland or Switzerland? Or perhaps I should wait with investing until next year (which I would rather avoid, I’m very eager to do it ASAP)?

I also read that having permit B can cause some taxation complications since all taxes are being ‘sorted’ automatically, which confuses me even more! I haven’t gone to the Kreisburo to register yet, but it would make sense to wait with any investments until I receive my permit. Or does a couple of weeks make any difference anyway?

My savings are in EUR but I will be earning CHF from now on. However, it is hard to predict where I will be in 5, 10 or 20 years time. So I think sticking with an ETF in EUR currency probably makes more sense. Or maybe I should choose CHF instead?

And any other thoughts are very welcome!

Any help would be greatly appreciated. :pray:

Thank you,

All of your worries are most probably irrelevant.

  1. You (usually) don’t get to choose your tax residency, even less so as an employee
  2. Why would you want to wait another year for your investing …unless you’re one anti-taxxer that wants to stick it to the Irish government? Whether you have to pay taxes in Ireland or not, the long-term returns of investments are positive. Isn’t it better to pay taxes on an investment gain, instead of not having one in the first place?
  3. If you notify your broker of your new country of residence (and, maybe, provide them evidence of having left Ireland), they’ll record your tax residency as being in Switzerland. Accordingly tax on your investments will be withheld at source the same as for any other Swiss resident (namely: Irish ETFs distribute free of withholding tax, and a Dutch broker, too).
  4. Normally, you will become tax-resident in Switzerland only. Unless there’s an exit tax or other transitional tax applied by Ireland.

It’s not complicated at all. However, you may be obliged to file taxes without the tax office actively requesting it from you, due to having capital income. If you call them, they will probably tell you straightforward.

The “confusion” on this forum comes just from those clever people that have noted “Oh… if I file taxes, I actually may end up having to pay more. Isn’t there a way around that?” (Well, taxation and obligation to file isn’t really a choice. Unless you deliberately minimise your capital income).

An ETFs trading currency is mostly irrelevant. Except for the small costs of currency exchanges your broker may do for you.

It could also be (and even for Irish ETFs often is) USD, Russian Rubles. What matters is the ETFs’ holdings and/or index they’re tracking.