An N+1st attempt to summarize information helping to optimize taxes arising from investments with ETFs.
Some preliminary comments: I am going to mostly refer to MSCI indices. Their definition/composition can be found at msci.com (search for pdf factsheets).
MSCI ACWI is all-countries index: 50 countries, 23 Developed Markets, 27 Emerging Markets. An up to date country weights can be found at
ACWI | SPYY : SPDR® MSCI ACWI UCITS ETF
(see Holdings → Geographical Weights).
Dataset 1: withholding taxes on dividends received from stocks from different countries for funds with different domiciles.
Data are both “theoretical” and extracted from yearly reports of various ETFs. Unfortunately LU ETFs do not report gross dividends and withholding taxes separately.
Red: expensive taxes
Green: potential tax savings
Yellow: data as extracted from annual report which I don’t understand completely. Could be one-off effects in particular funds.
In case of a Swiss resident, tax optimization includes (at least) two things: (i) less non-reclaimable withholding tax on dividends and (ii) less dividends which are taxed as income. So it is for example possible to move a segment that pays more dividends into a tax-sheltered account (3a funds at finpension/VIAC).
Dataset 2: % of non-reclaimable witholding taxes on dividends and dividend yields for some “whole world” (with and without emerging markets) funds.
Dataset 3: % of non-reclaimable witholding taxes on dividends and dividend yields for some “World ex US” funds. Only US domicile exists!
Dataset 4: MSCI indices (groups of countries) and withholding taxes reported by funds replicating those indices:
An interesting topic.
I myself invest in a portfolio weighted according to GDP and thus deviating from VT/ACWI. My choice of ETFs is mostly influenced by WHT and TER efficency consideration…
Looking forward to your conclusion!
Dataset 5: estimated total yearly cost of investing in various world market segments via different investment vehicles.
3a investing via CSIF Index Funds does not take into account tax savings when you pay taxes in and taxes paid when you take 3a money out. However considering how different these tax rates are, one probably benefits additionally from 3a investing. Wealth tax is also not accounted for, but it should additionally increase advantage of 3a investing.
With 20% marginal tax rate:
With 30% marginal tax rate:
With 40% marginal tax rate: 3a investing has lowest costs!
Interesting comparison. Another aspect is that you also save wealth taxes when investing in 3a. The marginal tax rate in Zurich with 400k net wealth is 0.22%, with 700k 0.33% and with 1.4M 0.44% p.a.
Wealth tax exemption is applicable independent of the specific investment chosen within 3a. So i’d say it is not valid to include it in this specific comparison, as this concerns the question whether one should use 3a and not the questions which ivestments to hold in 3a.
Relative advantage (difference of total costs p.a.) of investing into different geographic segments via a tax sheltered 3a index fund (finpension/VIAC).
With 20% marginal tax rate:
With 30% marginal tax rate:
With 40% marginal tax rate:
Excellent work, Dr. PI, very much appreciate your effort!
