So there’s the problem: VT’s not been lent out, but I’m sure IBKR has made substantial profits for example from the FAANGs inside your VT. Are you sure these are all passed on to you as lower ETF-costs?
Typo, I meant Vanguard, of course.
Just saying, in theory, having a single stock global portfolio, could maybe yield quite some securities lending profits. At zero ETF costs.
For me personally though, it’s not worth the hassle.
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This is not correct. You just shouldn’t have debts.
How can I see in my IB account how much I was paid for the participation in the lending program?
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Activity report, there are few sections about SYEP.
Any updates on this issue? I’m trying to get my head around securities lending for ETFs, and I’m still not sure whether it’s worth it.
What would be “unfair” about it?
It would just be costs you incur for your additional income from securities lending.
There’s no such thing as a free lunch.
Who says the borrower is necessarily eligible for such refund? Couldn’t there be borrowers that are not eligible for such a refund?
The whole Cum-Ex Scandal is proof that it does matter who actually paid.
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Thanks for the update, that’s very interesting, good luck with your query, I’m really curious how they’ll respond to it!
So no problem with US-domiciled ETFs then, if I understand you correctly?
But so far, your VT has never been lent out? That’s kind of surprising, because there clearly is an options market for VT, just look at the options chain on IB or any other broker.
Also, I’ve read that quite some people are following conservative options strategies with VTI / VT like covered calls, it’s become pretty mainstream. And looking at the current volatility, options trading should be running hot.
Withholding tax exists to make that securities income gets taxed (“properly”), even in an cross-border context. While it is, in principle, often refundable, there’s often cases where it’s not. In other words: Withholding tax having been deducted doesn’t guarantee that it can be reclaimed.
That doesn’t mean that WHT can’t become a cost though. Compare it to Irish ETFs: They aren’t able to have 15% US withholding on US stocks refunded either. It’s an additional cost, as opposed to holding US ETFs.
Yes - but I suspect (and am asking you) whether you did quote the appropriate paragraph, see here…
Well, yes, that is the case though, isn’t it?
“Interactive Brokers LLC (“IB”) offers eligible customers the ability to lend certain of their fully paid and excess margin securities to IB for on-lending to other IB customers or to other market participants” (Important Characteristics and Risks of Participating in Interactive Brokers LLC’s Fully-Paid Securities Lending Program)
This is, as I understand it, no. 3.2.2 in the tax administration’s document you linked (rather than 3.2.3).
Also, what about “Weiterveräusserung” in this context?
“Sofern der letzte Borger in der Transaktionskette die geborgten Wertschriften zur Erfüllung einer Lieferverpflichtung verwendet oder veräussert…” (the linked ESTV document)
Doesn’t this happen - or couldn’t it, with IBKR’s lending program?
“When you lend your Fully-Paid Securities, it is likely that such securities will be used to facilitate one or more short sales or satisfy delivery requirements resulting from short sales.” (Important Characteristics and Risks of Participating in Interactive Brokers LLC’s Fully-Paid Securities Lending Program)
Continuing with the ESTV guidance…
…kann keine der in der Transaktionskette involvierten Parteien einen Anspruch auf Rückerstattung der auf der Originalzahlung erhobenen Verrechnungssteuer geltend machen. Der Anspruch auf Rückerstattung der auf der Originalzahlung erhobenen Verrechnungssteuer steht grundsätzlich der Person zu, welcher die Wertschriften vom letzten Borger in Erfüllung einer Lieferverpflichtung oder infolge Veräusserung übertragen wurden" (ESTV again)
No refund for you, unless I misunderstand or am missing something, am I?
(…which I may. I just gave this a cursory glance. Also do note that IBKR warns you of potential adverse tax consequences of securities lending)
For me personally, I have my doubts whether it’s that clear (see my previous post).
Also, I noticed someone else in your reply above:
Please refer back to the ESTV document.
Both these diagrams refer to a domestic borrower: “eine Person mit Sitz oder Wohnsitz im Inland (B)”.
I’m pretty sure that IBKR (whatever their entity applicable) is not considered a domestic resident
Oh, it definitely is a reporting issue.
But that is the thing with withholding taxes:
They do exist (partly) for that very reason: Because reporting on the ultimate beneficial owner of and recipient isn’t always available or possible.
Also, the practical refundability of withholding tax is subject to reporting and/or proof. Which can get hairy, once you cross borders multiple times.
What should not be a big (but a mere reporting) issue in theory, may very well become an insurmountable in practice.
Coming back to the ESTV guidance (my: remarks in bold)
"Borgt eine im Ausland ansässige Person (IBKR) von einer in- oder ausländischen Gegenpartei (you) Wertschriften, deren Erträge der Verrechnungssteuer unterliegen, und verleiht sie diese an eine ebenfalls im Ausland ansässige Gegenpartei (unknown, but probably foreign) weiter, sind folgende Konstellationen zu unterscheiden:
b) Sofern der letzte Borger in der Transaktionskette die geborgten Wertschriften zur Erfüllung einer Lieferverpflichtung verwendet (IBKR: “When you lend your Fully-Paid Securities, it is likely that such securities will be used to (…) satisfy delivery requirements”) oder veräussert, kann keine der in der Transaktionskette involvierten Parteien einen Anspruch auf Rückerstattung der auf der Originalzahlung erhobenen Verrechnungssteuer geltend machen. Der Anspruch auf Rückerstattung der auf der Originalzahlung erhobenen Verrechnungssteuer steht grundsätzlich der Person zu, welcher die Wertschriften vom letzten Borger in Erfüllung einer Lieferverpflichtung oder infolge Veräusserung übertragen wurden."
What’s wrong with my reasoning?
(…that they’re may be cases where you’re not entitled to reclaim WHT. Except that you don’t like the result or amount of substitute payment 
Which may, I guess, be the reason why don’t report a tax withheld on their statements)
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Damn, what a rabbit hole! So you basically have no control over how your securities will be used. How often do you think your lending results in “satisfying delivery requirements”? Is that basically the case whenever call options are exercised?
Anyway, if that’s really the case I think IB should have to pay you the full dividends in these cases, without WHT, otherwise it’s an unfair deal.
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I agree. Any potential risk here should be carried by the borrower. The fee of borrowing a stock for a day is surely much lower than a typical dividend. If the borrower doesn’t want to cover that risk, they shouldn’t borrow the stock at dividend time. I expect the normal case to be that the borrowed stock is sold, in which case the borrower has to compensate the gross dividend anyway, don’t they?
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For non-US ETFs I actually never had to send any proof. I declare the ETF with all transactions and the dividend amount is automatically calculated from ICTax data. Verrechnungssteuer information is also taken from ICTax. At least ZHprivateTax says there is no need to attach broker statements for these cases and they also haven’t requested any statements after the tax decalration. I.e. in the tax authorities wouldn’t even know about regular dividend payment vs. payment in lieu.
That said, I anyway keep all my Swiss fonds at a Swiss broker and use IBKR only for foreign fonds.
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If you don’t like the answer, it doesn’t mean that the person giving it is not helping. @San_Francisco might be sarcastic sometimes, but no one can say that s/he is not helping. S/he does a lot.
Well, you don’t know that @San_Francisco is not a tax professional. Considering his/her personality, s/he might as well be.
I think you can forget about this withheld tax, but I might suggest you a technical solution for future: create a subaccount, disable securities lending in it and transfer there securities that you don’t want to be lent out.
Although keeping your CH allocation in Viac is also good and tax advantageous.
And I think you also don’t completely understand how withholding tax works. It is not IB or borrower that deducts it. It is send to the tax authority directly by the company paying the dividend, so no one ever gets it.
We don’t have to discuss this, and I’ll be the first one to admit I’m merely an 
with a keyboard, and not a tax professional. With all respect though, considering that you
- Are the top poster in this thread by number of posts by far
- Actively invited other people’s opinions on the matter and your interpretation (“Has anyone here a clue if I am right?”)
- “wanted to provide the information for anyone after” yourself in this thread
- …some of which of was demonstrably quoting the wrong/inapplicable information (no multiple lenders, domestic borger).
I’m quite honestly a bit perplexed by your attitude shown here. Since this thread is, as you said, also for the benefit of others, I also do feel somewhat compelled to at least factually point out the things I’m not following you on.
Why does it have to be? You aren’t receiving a dividend payment (for which WHT was withheld), but merely a substitute payment. For which no WHT was withheld - and IBKR “told you” that it may have adverse tax consequences. Furthermore, IBKR may be prohibited from reporting a tax withheld to you - to prevent exactly that: You going reclaiming a tax refund from your tax administration, when the actual recipient of the dividend does the same.
Yes - but possibly not to you - since you aren’t receiving the actual dividend payment.
…says who?
Your personal sense of fairness and entitlement?
Or IBKR’s terms on securities lending? Honestly, I can’t find it there. You’re receiving the same net amount that you’d also receive without lending. And they do tell you that receiving substitute payments may have adverse tax consequences.
That’s a practical of reclaiming of getting that money.
And you’ll most probably get away with it.
I’m still not convinced that you can be sure you’re legally entitled to that refund - especially when and where IBKR doesn’t report withheld WHT to you.
Well, life ain’t always fair. 
The thing is: It happens all the time. Especially with withholding taxes.
Holding German stocks in Yuh? Good luck getting that tax voucher for the Germans!
Reclaiming WHT from your French stocks with IBKR? No problem, they’ll “facilitate” it for you. You only pay 125€ for each attempt at dividend recovery - whether successful or not. Side note: This example and the fact that IBKR holds the securities in their street name further illustrate the subtle difficulties in practically reclaiming WHT.
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What is the behaviour? Are these customers receiving the gross amount as payment in lieu?
Or are they receiving the net amount (dividend less WHT) as payment in lieu and a “withholding tax withheld” line in the withholding tax report?
Do these people then order a German tax voucher for 30 EUR from IBKR, to reclaim WHT from Germany? And will this tax voucher name the the account holder - even though they didn’t even receive the original dividend payment?
It is not a question of cash or margin account, but if you are participating in stock lending program.
Any updates on what yield (in %) you get on your VT investment for participating in the program? Market volatility’s high currently, so I suppose more VT lent out?
Also, no troubles with tax authorities so far explaining this additional, non-dividend yield?
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Forget about it. Borrowing rates for biggest and most liquid securities has a floor at 0.25%, and you get a half of it.
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