No dividend tax on VWRD?

Hi

I have some units of VWRD (FTSE AW ETF) ans I saw that the recent dividend was not taxed by DEGIRO. I have some other ETF with them and they’ve always applied some sort of dividend tax.

What is different about this fund? Will I have to pay back the applicable taxes since DEGIRO did not deduct them?

Thanks!

Irish funds normally have 0% withholding

But it’s not tax free of course, quite the contrary: you’ll get double taxed with it. You’ll pay full swiss income taxes on it after you list it in your tax declaration, plus withholding taxes of original countries have been deducted at fund level - like 15% for US

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I own VEUR and yes, there is no withholding tax. But it has already been paid by the ETF, so your dividend is just lower.

Exactly because of this reason you cannot get this withholding tax back. With a US ETF the tax will be taken from you, so then you can reclaim it.

Thanks for the info.

And I thought I hit the jackpot! :smirk:

Unfortunately DEGIRO no longer lets you buy those.

So ditch them for a better broker who does, problem solved.

thanks for this information. I did not realised of this difference between the UCITs Funds and the USA registered funds. We are getting taxed more on the dividends and we cannot claim back this WHT under CH tax law, agree this is a problem. However I still think that holding UCITS vs USA funds has 2 advantages:
1 - USA funds holding make you fall in scope of US inheritance tax as a US companies direct holder
2 - UCITS funds can be held in various European currencies and so you don’t have to FX your investments in and out of the fund.
Lastly, the US WHT is only applied to US stocks in the funds, that is around 54% of the equities in VWRD/L
What do you think?
thanks for sharing all this information, its very useful.
Bea

ad1: yes. estate tax is not an issue with Irish domiciled funds. But if you’re domiciled in Switzerland, up to $11 million will be tax free on your death.

ad2: so what? currency conversions on IB are dirt cheap. and ETFs in USA are much more liquid. The spreads are much lower than in Europe. You lose much more money here than on FX.

ad3: yes. but they also have lower TER

Thanks for this information, I did not know about the 11 million. Could you share where you found this information as I am planning to move to a different country at some point

you can use the search function on this forum. there are bilateral (i.e. between two countries) treaties that regulate the handling of US estate tax. For example Switzerland has a treaty with the US.

Here is a list of countries with a treaty:
https://www.irs.gov/businesses/small-businesses-self-employed/estate-gift-tax-treaties-international

Thank you Bojack, this is helpful, I will review

I am sorry to come back on this topic again, but it seems that the exemption threshold only applies to US nationals, US domiciliaries. For other non US domiciliaries, then the threshold is USD 60K on US situs assets, then 40% tax is applied. See this article from pwc

Yes, but that’s why there is the treaty. The treaty says that if you are a Swiss national, or if you’re domiciled in Switzerland at the time of death, you will be treated as domiciled in US.

Here the actual Swiss-US treaty:

Article III
In imposing the tax in the case of a decedent who at the time of death was not a citizen of the United States and was not domiciled therein, but who was at the time of his death a citizen of or domiciled in Switzerland, the United States shall allow a specific exemption which would be allowable under its law if the decedent had been domiciled in the United States in an amount not less than the proportion thereof which the value of the total property (both movable and immovable) subjected to its tax bears to the value of the total property (both movable and immovable) which would have been subjected to its tax if the decedent had been domiciled in the United States.

This sentence is just so terribly written. Who writes such long sentences anyway? Thank you lawyers…

But any, translating from lawyerspeak to human language: if you are domiciled in Switzerland at the time of death, you will be eligible for the same exemption (11 million) as US domiciled persons.

In case of doubt, consult a lawyer or buy European ETFs.

And again, I have already written exactly the same thing somewhere else on this forum.

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A small inheritance related (but not related to US assets) lawyerspeak anecdote, I’ve been informing myself about South African-Swiss inheritance finesses. It seems that basically between these 2 countries inheritance law is (mostly) regulated by a Treaty Switzerland signed with Great Britain in 1855, which was extended to include the then-Cape-Colony in 1856! No wonder lawyers always (at least make it sound) so complicated or are forever avoiding a definite statement, could-be-X, but could-also-be-Y etc. :slight_smile:
PS before a lawyer corrects my comment, it’s an anecdote above & there might be exceptions etc.

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