Has anyone opted in for securities lending in Switzerland?

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.

I am aware that companies send the tax as soon as they pay out the dividend. But now that we all agreed that we all don’t understand anything, your upper mentioned solution is actually great!

Just to elaborate further. Even if WHT is irrecoverable, IB must report that it was paid. If not, they could just report me the net, reclaim the difference and boom 35% profit off of my dividends.

For me as a lender it’s quite irrelevant who pays the tax tbh. Either it get’s passed from holder to holder OR the borrower owes me the gross amount and he can figure out, how he get’s it back (or not, due to lack of entitlement). In this case it seems like the tax was deducted and passed on to me, but not reported in IBs statements. Their previous conversation even states a calculation to prove that. So I only ask for the correction of the documentation.

I had the chance to ask a friend who does taxes, but he isn’t specialized in securities tax law. He basically told me what Jay did. I shouldn’t bother to send proof, as I already declared the shares and for Swiss WHT, they usually don’t ask for further proof.

TLDR: Either the borrower pays gross dividends or IB provides me the 35% deduction in my statements. I don’t think that there is any other fair solution to this. Who knows if IB kept the refunded tax from the borrower, but actually got a refund etc…? I am pretty sure this is more than problematic from a compliance POV

We don’t have to discuss this, and I’ll be the first one to admit I’m merely an :gorilla: with a keyboard, and not a tax professional. With all respect though, considering that you

  1. Are the top poster in this thread by number of posts by far
  2. Actively invited other people’s opinions on the matter and your interpretation (“Has anyone here a clue if I am right?”)
  3. wanted to provide the information for anyone after” yourself in this thread
  4. …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? :point_right: 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. :smirk:

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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Why would anyone, even IB as intermediary accept such a behavior? It’s the obligation of the borrower to pay back the dividend. If the tax is passed on - fine (report it ffs) if not, fine as well, just pay out the gross amount, I get taxed on that and everyone is happy.

IB has neither told me that they don’t want to report it nor that I am not entitled to a payback. Infact: On the phone I told them exactly what happend and they motivated me to open a ticket, as this seems to not be normal behavior, but yeah.

For German taxes btw. that’s exactly the behavior. I have seen this and talked to people who experienced this. For some magical reason, this mechanism doesn’t seem to work for CH Taxes. I’d say it’s just an error, possibly a human one, since the dividend processing is done manually (according to IBs support).

But we will see. I am waiting for IBs response.

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?

The lender gets the gross amount without any tax deduction. No German tax voucher needed. In fact, I’d even pay for the Swiss one, if needed. I am still in the process of clearing things up.