Splitting the world: creating tax-advantaged global stocks portfolio using funds in 3a account

[Dr.PI]

@Brndete

you include Canadian domicile for Canada

It was discussed and some people say they buy CA ETFs directly from Toronto stocks exchange and reclaim back 15% WHT. So, it works.

For Japan I was thinking about it, but never tried any practical steps. Would be happy if anyone shares some experience.

@Brndete

Have you checked or considered any LU-domiciled funds for non-US markets?

Yes! LU ETFs do not share separately the amount of gross dividend received and WHT taxes paid, that’s why originally I focused on IE ETFs to understand L1 withholding taxes. I don’t think LU is much different in this respect, so I think the data can be taken over. There are also many swap-based ETFs with LU domicile, which is something else and which I don’t consider.

[assemblyrequired]

On the topic of WHT: I see that under “vehicles” you listed all rows for US ETFs twice, once with 0% L2WHT and once with 15%.

I’m aware of L2WHT of US stocks (over CHF100) being reclaimable with DA-1 as a Swiss investor, but what about all the other regions?

[Dr.PI]

@assemblyrequired

I see that under “vehicles” you listed all rows for US ETFs twice, once with 0% L2WHT and once with 15%.

To compare two limiting cases.

@assemblyrequired

L2WHT of US stocks (over CHF100) being reclaimable with DA-1 as a Swiss investor, but what about all the other regions?

L2 is determined by the funds’ domicile. IE and LU have none. US and Canada have 15%, in principle completely reclaimable via DA-1. Besides those, there is hardly anything of interest. NL is 15% reclaimable. DE and FR are more, but those ETFs are mostly optimized (?) for domestic investors.

[Brndete]

@Dr.PI

For Japan

CA I get. I used to have one and had no issues with reclaiming the withheld 15%. Just wondered whether you left out JP intentionally, it being the bigger market.

For JP, I’m getting withheld 15% (same as IE-based ETFs report), whereas I read 10% in the treaty. In some years, a reclaim of full 15% went through. In another, it was corrected down to 10%. Haven’t tried reclaiming the remaining 5% in JP directly, yet.

[assemblyrequired]

@Dr.PI

L2 is determined by the funds’ domicile. […] US and Canada have 15%, in principle completely reclaimable via DA-1

So I need to have a US-domiciled ETF for US stocks and a Canada-domiciled ETF for Canadian stocks, to be able to get WHT back via DA-1?

[assemblyrequired]

@Brndete

For JP, I’m getting withheld 15% (same as IE-based ETFs report), whereas I read 10% in the treaty. In some years, a reclaim of full 15% went through. In another, it was corrected down to 10%. Haven’t tried reclaiming the remaining 5% in JP directly, yet.

On this page from Steueramt ZH (in German), there’s a link to this PDF DA-1 Antrag für natürliche Personen 2023 which contains a table of WHT percentages per country. The value for Japan is 10%.

Maybe that changed sometime back, or you got lucky and the person handling your taxes didn’t know it should be 10% instead of 15%?

[Dr.PI]

@Brndete

For JP, I’m getting withheld 15% (same as IE-based ETFs report), whereas I read 10% in the treaty.

Can you give information about specific ETFs with JP domicile on JP stocks? And maybe some more details about how you buy it, anything tricky (besides staying awake between 1 and 7 am to place orders)?

[Dr.PI]

@assemblyrequired

So I need to have a US-domiciled ETF for US stocks and a Canada-domiciled ETF for Canadian stocks, to be able to get WHT back via DA-1?

Basically, yes. All L1 WH taxes are lost for you, except maybe finpension will start something in that direction.

[Brndete]

iShares offers for example ETFs on the Nikkei 225 (Symbol: 1329, ISIN JP3027710007) and TOPIX (Symbol 1475, ISIN JP3048120004), both with 0.045% TER and large enough AUM.
Think of Nikkei 225 as large-cap price-weighted index like the Dow Jones, TOPIX as a broad, market-cap weighted index like total US.

Nothing tricky about it, tradable like any other instrument, if your broker covers TSE. Same for FX. Symbols are numbers and JPY values seem high if you are used to CHF, USD or EUR.

Damn, I don’t like logging into my account at days with >1% down.

I do a limit order every few months or even longer, whenever it’s JP’s turn as per my asset allocation, so I don’t mind the trading hours.

[assemblyrequired]

@Dr.PI

Basically, yes. All L1 WH taxes are lost for you, except maybe finpension will start something in that direction.

Me again, with another noob question: so I found this US-based ETF which covers MSCI Canada.

When I look this ETF up in ICTax, I see that it is marked with a Q which signifies withholding taxes. When I enter it into the DA-1 form of the ZH Tax software, it shows me that I get 15% of dividends back.

So am I understanding this correctly: are those 15% from ICTax the L2WHT, but there are still 15% L1WHT that are lost? So basically from CAD 100 dividends, 15 are kept by Canada and 85 go to the fund in the US, and when paying out those dividends, the US keeps 12.75 and I get 72.25, and via DA-1 I can get the US’ 12.75 back?

[Tony1337]

You are spot on. It‘s exactly how it works.

[assemblyrequired]

Thank you. And thanks for bearing with me

[varepsilon]

Oh, no! I’ve just decided to bite the bullet and do some rebalancing (despite the transaction costs). And now you are telling me there is a fund that suits me better… Oh, well.