Safest and Tax Efficient Investment

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Dear all,
As a non-swiss investor living in Switzerland the tax field becomes challenging to understand since most of the documentation is in german and many times with translator/AI it’s even difficult to follow. At the moment I have my cushion money converted in EUR and invested at 3.9% bank deposit in CIC. This is not very tax efficient since I will need to pay 35% as witholding tax. So it’s only generating me 2.5% net after tax.

I was wondering if you would recommend me any type of investment like Corporate bonds with AAA (Microsoft, Apple, Amazon…) or Treasury debt which could potentially bring higher returns and be more tax efficient.

A classification linked with its yield and tax associated would be great to see so it can help others!

Thanks a lot in advance

2

The end result is similar.

Interest from bonds or savings account are added to your overall taxable income and the Swiss withholding tax (when applicable) will come in deduction of your final tax bill.

For a Swiss investor, the most tax efficient is to generate non taxable capital gain (various options here depending of your risk appetite). Investing in swiss real estate funds may be an option too (see the forum for more information on the tax treatment, it was discussed extensively)

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Do you expect to stay long term in Switzerland or return to a EUR country later? If you plan to stay, I would consider it a bit risky to keep everything in EUR cash due to currency exchange rates (CHF has the reputation to get stronger over time).

4

This is incorrect. If you declare the interest income correctly, you will receive the 35% back. For your convenience the tax office will calculate the refund with your income tax, so it’s easier for you.

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The illustration is in german, but you can translate.

Why do you invest in EUR deposits if you are living in Switzerland? Long-term you will most probably lose money as @almi pointed out.

You could put your money in $BOXX [1][2]. Proceeds from this investment are currently considered tax-free on Switzerland. But again, it’s USD.

[1] Alpha Architect 1-3 Month Box ETF - Alpha Architect ETFs
[2] High yield with box spreads - #5 by Helix

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Plan is to go back to EU country in around 10 years.

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So they will reduce my taxes by the same amount they took as withholding tax? so, deposits are tax free at the end???

My idea is to go back in 10 years or less, it’s in EUR since the converstion was so attractive in the past year and the interest higher. If at some point the CHF weakens I may consider to convert it back. But ultimately I will need EUR to live.
Thanks

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No, they will reimburse 35% withheld, but tax it at your marginal tax rate as it will be added to taxable income.

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Any one brave enough to go through a classification from less risk to more? Copy/Paste

  • Bank deposit - 35% withheld at Swiss banks but returned after tax.

  • Shares / ETFs: capital gains are 0 taxed but dividends are XX% taxed.

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Maybe be brave enough and do the classification yourself, learn by doing.