How to get credit/refund for withholding taxes on Dividends (for Swiss Residents)

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23

(Correct me if I’m wrong, but)
With Ireland-based funds you give up the 15% WHT (L1?), I believe you can’t do anything about it.

24

Ok cool! Thanks for confirming ! I thought so but have been doubting if I’ve not missed something, cool that it’s not the case :white_check_mark:

25

No refund is applicable.
Nothing to worry :slight_smile:

26

Hello,

It can be helpful to include the scenario where an investor has not filed Form W-8BEN. This often comes up in forums or when someone uses a broker that is not a Qualified Intermediary. In those cases, the process is as follows:

Case 1 -: Swiss broker (non-Qualified Intermediary or Form W-8BEN not filed with Qualified Intermediary)

  • VWRL will have 0 withholding tax
  • CHSPI will have 35% withholding tax, let’s call it C1
  • VT will have U1 = 30% WHT , U2 = 0

Case 2 -: International Broker (non-Qualified Intermediary or Form W-8BEN not filed with Qualified Intermediary)

  • VWRL will have 0 withholding tax
  • CHSPI will have 35% WHT, C1
  • VT will have U1 = 30% WHT , U2 = 0

In both VT scenarios, you may claim a 15 % credit on U1 withholding tax against your Swiss tax liability by using Form DA-1. You may not[1]:

  • Request a 15 % refund of U1 withholding on Form R-US 164, or
  • Claim the full 30 % U1 withholding as a credit on Form DA-1, despite what some forum posts suggest.

You may be able to recover that extra 15% by filing a U.S. nonresident tax return (Form 1040-NR), but that option is beyond the scope of this guide. [2]

This is why it’s essential to choose a broker who is a Qualified Intermediary (foreign or Swiss) and to file Form W-8BEN. Only then can you avoid irrecoverable withholding.

Source:
Swiss Federal Tax Administration (USA)
[1] III. 1. c. & IV. 1.
[2] III. 2. c.
DE - Übersicht über die Auswirkungen des Abkommens vom 2. Oktober 1996
FR - Aperçu des effets de la convention du 2 octobre 1996

It might also help to include, on the same line for both scenarios (whether Form W-8BEN is filed or not), the refundable or creditable amount and the corresponding form (DA-1/R-US 164) for each withholding tax category (U1/U2) directly alongside the VT entries, making the information more immediately clear.

One last note on this topic: it appears that scenario 4 (options 1 and 3) in this post of the Mustachian Post blog is incorrect regarding the amounts recoverable and the forms required in each case.

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