Investing from CH - taxes, FX rates and other considerations

Investing / Brokers
1

Hello,
I’m new to investing from Switzerland, and look for Mustachians recommendations on general approaches that make sense when investing internationally.

Currency -
I see a lot of praise for the VT ETF for example, but as this fund is in USD, wouldn’t that impact negatively the return? What is a recommended ratio of CHF investments vs other currencies? How to optimize against FX rates?

Taxes -
Newbie question here as well - are there funds or ETFs that have tax advantages or disadvantages? I know that overall both earnings (potentially) and wealth taxes come into play when investing, but I would love some guidance on what to look for (e.g. does the country of the fund makes a difference? location of the broker? etc.)

Thank you.

2

please use the search feature of the forum. tl;dr: No because you invest in companies/assets that are independent from the US dollar. If you would invest in VWRL instead in CHF you would get more or less the same performance just including the inflation/deflation between the currencies.

For Swiss citizens it doesn’t matter. Acc or Dist ETFs are taxed the same. The only time it matters if you have any relation to the US (e.g. citizenship, greencard, etc.) where IE domiciled ETFs would be more advantagous iirc.

2 Likes
3

It sure can.

U.S.-domiciled funds will generally receive U.S. („from U.S. holdings“) in full.
Others, such as funds in Luxembourg, Ireland or Switzerland (for retail investors) will not.

When distributing to the Swiss-domiciled holder of fund units, a withholding tax of 30% will be applied.
This can be effectively reduced and reclaimed to 0% by W8-BEN and DA-1 (as has been extensively discussed on the forum).

Funds domiciled in other jurisdictions will usually receive U.S. dividends only after 15% or 30% deduction of withholding tax (depending on applicable DTA).

Even if these funds distribute their income in full, i.e. without any further Luxembourgish, Irish withholding tax applied, the Swiss-domiciled investor will be unable to reclaim the U.S. WHT.

The same could, in principle, apply true for other jurisdictions. The U.S. is just, obviously, a prominent example.