- I’m currently negative on my VT investments. Would it be better to sell now and switch to VWRD to avoid capital gain taxes?
If you are negative on VT, there would be no gain.
Firstly, I think it’s important to take some time to decide what’s best for you, don’t worry about your VT sitting in your IB account for now.
The only thing, if the US estate tax is one reason while you’re considering the switch, and you have more than 60k invested currently, you should sell at least the amount that’s over 60k, so you can sleep better at night. 
Now, there is no capital gains tax for private investors in Switzerland, that you got alright 
Actually if you google it, you will find info on this subject like this article:
explaining how it works and mentioning the five criteria the federal tax office uses to differentiate private and professional investors. Check those out and see how you stand.
The criteria (criterion?) that might apply to you if you’ve been investing in VT all this time, is that you have some VT that you bought less than 6 months ago. But even if this was the case, if this was the only criteria that applied to you, even if you had some gains, everyone on this forum will tell you, you would still likely not be considered a professional investor. But again, if there’s no gain, there’s no tax anyway.
However if it makes you feel better, you can just wait 6 months before you sell the shares (or the shares that were bought this year), simple as that.
Does it makes sense to keep VT and VWRD? No.
- from an investing and allocation point of view no - they both cover the whole world and mostly overlap.
- depending on your reasons for switching away from US-based funds you might anyway want to sell VT completely sooner or later.
- and unless you really love seeing both in your portfolio, having only one fund will make everything from your portfolio managing to dividends and tax return much easier, no reason to complicate your life.
And a last point you might worry about when you get to it, unless you have 100s of k worth of VT accumulated, even if it’s a larger sum, check the number of shares the ask first when you sell, but don’t worry about selling it in one transaction. Also the best way to go of course fee-wise.
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So to make it clear: if you own even a single share of US-domiciled stock/etf at the moment of your death, this is potentially subject to US estate tax, and in order to waive that tax, you need to file paperwork and wait for the approval from the IRS?
Since I own many TSLA shares and do not intend to sell anytime soon, I guess I just have to live with that. So in my case owning VT on top doesn’t change much, just whether that other part of my portfolio would be available relatively soon or not. If my heirs don’t want to lose any money to taxes, they would need to file the paperwork anyway, right?
I don’t think so.
According to this:
one only has to file the documents if the holdings are more than 60k.
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Well, either way, 60k is peanuts. I wouldn’t recommend anyone to start with VT and switch to VWRL after reaching 60k. I would rather say: plz man acquire skills, get a better paid job, up your savings, and forget about funny ETF optimization…
There’s no capital gains tax in Switzerland, unless you are qualified as a professional investor.
How much VT are we talking about?
Around 150K USD
Furthermore, you can buy VWRL with any European broker, it doesn’t have to be IB. (Or yes, margin loans).
Clear thank you. Are there advantages of switching to an European broker? I like IB.
The only thing, if the US estate tax is one reason while you’re considering the switch, and you have more than 60k invested currently, you should sell at least the amount that’s over 60k, so you can sleep better at night.
Shouldn’t I still need to file it and flag to US tax authorities, even if under 60K?
And a last point you might worry about when you get to it, unless you have 100s of k worth of VT accumulated, even if it’s a larger sum, check the number of shares the ask first when you sell, but don’t worry about selling it in one transaction. Also the best way to go of course fee-wise.
Can you explain this one further? I do have more than 100K. Should I sell in smaller increments to save on fees, instead of 1 large order?
Well, either way, 60k is peanuts. I wouldn’t recommend anyone to start with VT and switch to VWRL after reaching 60k. I would rather say: plz man acquire skills, get a better paid job, up your savings, and forget about funny ETF optimization…
@Bojack It’s however my case, I have invested in VT but am considering switching to VWRL (based on this threads comments). I’m not doing funny ETF optimization, but looking to simplify and stick with 1 ETF. I’m above 60K on VT already.
Way to go
You yourself wouldn’t, your descendants might. But according to the IRS website (see above) no. You’ll also find articles in the Swiss press if you google this, mostly in German, that attest to this.
Well, not that I have any experience with this but I can imagine you would want to plan a large trade like this.
Placing a market order without checking the spread and BID/ASK prices would probably not be wise, you risk selling parts of your position at lower prices; and setting a simple limit order might leave you with unsold portions of your shares if there are not enough shares in the BID.
All this might not be relevant for VT that has a very high volume and where even 150k is not a big sum Currently there are 1200 shares in the BID (changes all the time) @ $87.04 which amounts to 105k, so technically you could place a limit order for 1200 shares at that price and get it filled immediately. Or alternatively set a limit price slightly lower let’s say at $87 for all 150k worth of shares and hope to sell everything in one go to save on fees.
Btw does anyone know how the fee system works if you put a limit order and it gets filled in increments (separate trades)? I assume the fee is still charged once, as there was only one order, but I’m not sure.
Also I wonder how it would work if you placed an IB MidPrice order for the 150k worth VT …
Obviously this issue with the US estate tax is very debated, and besides personal reasons, let’s be honest, also for some ambiguity associated with it - many of us at some point in time were wondering a lot about this before doing our research, and this thread shows very well that there’s still a lot of uncertainty.
And that’s the problem with this in my opinion, a lot of us haven’t done our research before starting to invest in US securities / ETFs. I personally knew of the estate tax and the 60k limit from the beginning, but not the issue with the US tax return and formalities etc.; had I known, I would have stuck with VWRD.
I don’t know if this applies to @uji, but I can bet there are others out there who have invested 100k+ in US stocks/ETFs and never thought of or planned for this estate tax.
As long as they never get informed (via this forum for example) and if anything ever happens to them, their family would find themselves in a position of not knowing anything about this, and/or where to start, or what documents to file for the IRS.
And this is why I think it’s so important to get the word out there about this, so people can make an informed decision and plan for it, even if they do decide to stay invested in US stocks.
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What I mean is, it should never be recommended to start with VT and then switch once you reach 60k. Exactly to prevent your case. Best to learn the pros and cons at the beginning and choose the right ETF at the start.
Financially no, but many members here prefer to have their wealth at a Swiss or at least European broker, as it might be better and easier to handle very bad situations if the broker goes bankrupt for example.
Nevertheless there is always an option to transfer securities from one broker to another and if you are not comfortable to keep your life’s savings at IB, you can just transfer out the accumulated securities.
For US securities the commission is paid on the number of shares traded. If your total order is more than 100 shares, your commission is just proportional to the number of shares. They are very small anyway.
I have over 100k in US ETFs at IB and I plan to continue buying. I have informed myself about US estate tax in advance and I decided to not fuss about it.
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If I’m terminally I’ll, I’ll sell my US assets on the deathbed - in the hope that it will make it easier for the executors of my estate/heirs.
If it doesn’t or I’m unable to, they’ll pay a professional a couple of thousands of CHF to file. It’ll still be worth it, it they inherit a six or seven figure amount. And it’s not as if they’d be well-versed enough with tax filings to do it in Switzerland (for European securities) either.
Honestly, I’m not fussed about it at all either.
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Exactly - I wasn’t here for a few months but sad to see that many folks are still focused on the wrong levers
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I’m not sure what you mean by that, I thought commissions are paid per value of the trade, not the number of shares.
Maybe I didn’t express myself properly with “an order that gets filled in increments”, what I meant was what if a limit order gets filled partially and then fully for the remainder of the shares 3 hours (or a day) later, does the commission apply cumulatively to both trades as they are part of just one order, or does one pay two commissions?
I’m relatively new here, and I think it’s great that this forum exists, where people who know a lot about these topics and people who know less can get together, discuss issues and learn more about handling their investments in an efficient way.
I don’t see what getting personal about other people’s investment decisions, risk profiles etc. can achieve.
@uji I hope you ask enough questions and receive enough answers on this forum that at the end of the day you learned something new and are comfortable with your how you invest your hard earned money.
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At European exchanges, yes. But at US ones it is per number of shares. See IB pricing.
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Of course it is, buying VT with such small (and always around the minimum) commissions I had forgotten about that.
Thank you @Twain . As I said above I’m considering the switch and this thread has been very helpful, I’m thankful for this forum. That said, I’m not fully decided yet between VT and VWRD. I see advantages and disadvantages to both scenarios and unclear on the best path forward. I will continue to inform myself and better weight pros and cons.
One irrational risk that I also consider is regulatory changes on the US side. It’s possible that a lot changes within the next 30-40 years (e.g. tax treaties) and it might be safer to invest in Europe-domiciled ETFs.
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Then you’d simply sell and rebuy another one - when/if the changes get announced, no?
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Yes I certainly learned a lot here as well - but that is not the point.
Bojack wrote: “plz man acquire skills, get a better paid job, up your savings, and forget about funny ETF optimization…”
First things first. 80/20 rule. Call it whatever.
The book “just keep buying” basically says your focus shouldn’t shift before your investment income is bigger than your regular income. I think that is a sensible strawman.
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Great advice from @Bojack as a general rule, but I don’t think he meant it for anyone in particular.
Sure, good advice for a young 24 year-old “Jim” who just started his first job 4 months ago and is investing 300 dollars a month in a 12 ETF portfolio based on as many Youtube pundits, out of which half obscure/sector ETFs and the other half basically overlapping.
But @uji has a good portion of his investments in VT, which is the gold standard (also for this forum) for a minimalistic one-ETF ideally diversified total world portfolio, and is just wondering about switching to its European equivalent for Fund-domicile reasons, and trying to keep it simple as he himself said.
Not to mention getting to 150k invested does maybe assume some skills and a good paid job.
And isn’t this a place where one could come to even ask “stupid questions”? I look forward to many "Jim"s coming over on the forum and getting some good advice in the future from the forum’s members without too much judgement, no one is born a guru