Swiss might lose access to US domiciled ETFs in 2020 - what are you going to do about it?


According to this article we are no longer going to be able to buy the cheap US domiciled funds with efficient dividend tax structures.

I am in the process of setting up my portfolio with Interactive Brokers. I want to keep it as simple, low cost and lazy as possible. Initially I was thinking about putting it all into a world ETF. Since the EU domiciled World ETFs are pretty expensive and rather small, I considered putting it all into a S&P 500 index since it’s the cheapest and US companies have a worldwide exposure anyway.

My VIAC Global 100 does have international stock exposure so it is not completely neglected in my overall portfolio.

Vanguard S&P 500 UCITS ETF would probably be the best EU domiciled fund, although it is a distributing fund which will be taxed at 35%, can this be improved?

Is my lazy S&P 500 strategy fine or would you strongly recommend against it? How do you adjust your portfolios in 2020?

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Hi Merlin,

If you are interested, I wrote a post about a portfolio with European ETFs:

But one note: It’s not entirely certain that we are going to lose access to these U.S. ETFs. Several people told me that this would not apply to IB. I do not understand the law enough to know if it’s true or not. For now, I am waiting. As long as I have access to these funds, I am going to go with it.

Even if it’s only for 6 months, I would recommend continue with U.S. ETF if you have IB.


This was discussed in US-ETFs (VT for instance) not available anymore in Switzerland!

I don’t think the Swiss law forces brokers to drop US ETFs as long as they don’t promote them (some might choose to drop them so, though).

Thank you guys! I will start with the US based funds then. Loved the two posts of yours @thepoorswiss.Three more questions:

  1. Is it still preferred to buy distributing funds over accumulating ones? (Not only for maximum $ but also time savings when reclaiming withholding taxes)

  2. Are there strong opposing arguments to buying just one larger S&P 500 ETF with low TER instead of the usual mix or world ETF, given that I have some worldwide exposure in my VIAC Global 100 Portfolio?

  3. Is the VIAC Global 100 Portfolio still considered to be good or is an individual strategy much preferred?

Some quick thoughts:

1.) not sure about time saving but from a tax perspective it does not make a difference, just make sure the ETF is listed on ICTax

2.) No strong opposing arguments, though I would go for some kind of world strategy eg. VT (single etf, no mix required)

3.) Global 100 is good. I have an individual strategy but the only thing i really changed is replaced most of the swiss large cap (SMI) with swiss mid cap equities (SPI Extra). The SMI is not diverse enough for me


This is complete and utter FUD, that guy is clueless.

This has been discussed more than enough times. The Swiss laws don’t affect non-Swiss brokers, and won’t block even Swiss brokers from selling US funds.


Why should it be taxed at 35%? Won’t it be taxed at your personal (average) rate?

That’s not altogether putting all your eggs into one basket - but is a high concentration in one single country, with the vast majority of companies (de facto) being incorporated and/or having their main operation in the very same single country. Also, Wikipedia says (though without giving a source for that claim):

“the sum total revenue of the 500 companies is approximately 30% foreign (estimates vary)”

Whatever the number, if you feel comfortable in putting “so many” eggs into one basket, you might just as well do it. At least I’d guess that that particular basket (index) has outperformed many other indices historically. But is that a guarantee on future outperformance?

Seems a bit more efficient from costs and time of reinvesting perspective. For funds with distributing and accumulating share classes as sub-funds of the same fund, the accumulating class seems to have slightly lower TER in cases.

Let’s how this pans out.

Do E.U. laws prevent E.U. brokers from offering U.S. funds to Europeans? I don’t know for sure but I don’t think so. Though at least nobody seems to feel it’s worth doing the paperwork required to do so.

I think when people say US fund in the context of MiFID, they implicitly mean fund who do not follow EU regulation for retail investment products (of course a US fund could provide a KID and other prospectus, but they haven’t bothered so far).

We know exactly how it works: the EU law applies to EU based brokers selling to EU residents. It neither applies to non-EU brokers nor to non-EU resident customers.

IB (UK) are blocking US funds for EU residents. They are not blocking US funds for non-EU residents (because the EU law doesn’t affect us).
De Giro and some other european brokers are lazy and blocking US funds for everyone, but that’s just because they’re too lazy to differentiate - and they probably don’t have enough non-EU customers to make it worthwhile to support us.
Schwab US are not blocking US funds for EU residents. Because they’re not an EU broker. (There is also a Schwab UK - no one knows what they’re doing, but almost no one is a customer of Schwab UK nowadays.)

The Swiss equivalent law is (A) not identical to EU law, hence we don’t know if it would block sales, but (B) is explicitly only applicable to Swiss brokers. FinCen have explicitly confirmed point B.

But of course who needs to look into the details when you can write click-baity headlines that boost your blog traffic and hence income?


@Merlin I have to say I don’t feel OK with the title of this topic, because it may very well be false and just freak people out. Can you at least convert it into a question?

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  1. For me, yes. They have the same tax parameters. But a distributing fund is more flexible and practical in the long-term.
  2. It will depend on the size of your portfolio and your third pillar. If you third pillar is 90% of your investments, then S&P500 is fine with the diversification from your third pillar. If your third pillar is 10% only, I think you should opt for some VT as well in your broker account. But, a S&P 500 is already a very good choice since the U.S. are almost half of the world stock market.
  3. It’s a very good choice.

It has already been discussed. It will probably affect us. The Swiss Law, not the EU one. It will affect foregin companies that advise swiss customers as well.

page 12:
The same requirements also apply to
foreign financial service providers who
advise clients in Switzerland.

As indicated by the heading in that document (“Registration of advisors”), this quote pertains to the requirement of advisors to register - and not the prospectus duty outlined under a separate heading on the same page.

A lot has already been said, but perhaps it’s helpful to delve a bit more into the legal details, for those that are interested.

What impact does the new FIDLEG/FINIG have on the offering of US-based funds in Switzerland?

The new Financial market regulation in Switzerland FIDLEG/FINIG will not directly regulate foreign brokers (exception: the foreign broker wants to establish a permanent type of business presence in Switzerland, but that’s not really what’s interesting us), but it will have an impact on what they’re able to offer in terms of financial products (in our case: ETFs) to clients based in Switzerland.

Among the new requirements is a so-called “Basisinformationsblatt für Finanzinstrumente” which is, basically, the Swiss version of the European KIID. According to Article 35 FIDLEG, whenever a retail client (such as most of us) is being provided a financial instrument (e.g. an etf share) by a financial services provider (e.g. a broker/bank), a KIID has to be available. If that is not the case, said financial instrument should not be offered to Swiss retail clients. This will be true not only for Swiss based brokers/bank, but also for brokers/banks domiciled in other parts of the world whenever they want to service the Swiss market with that financial product on a large scale.

Now, as has been pointed out in this thread, for US-domiciled funds, the fund administrators have not been willing to produce these kind of documents for the European markets because these funds were originally not intended to be distributed in Europe. That’s why the European brokers have stopped offering US-based funds to their EU clients after the PRIIPs Regulation has been enacted at the beginning of last year. It’s not impossible that some fund administrators will eventually produce some of the required documentation, but I wouldn’t hold my breath regarding that. At least the big fund providers have their own EU-based ETF offering incl. higher TERs compared to their US offerings. From a numbers point of view, they lack the incentive to produce and keep those documents up to date.

What does that mean for foreign brokers (e.g. IB/Schwab/Degiro etc.)?

Well, if they want to be compliant with the new regulation, they will most likely have to cease offering US based fund products to Swiss retail clients (if no KIIDs are being produced). Degiro chose to do that for Swiss clients prematurely based on the new PRIIPS regulation before the new Swiss regulation was enacted. I fear most other brokers will likely follow once FIDLEG/FINIG is enacted (probably at the beginning of 2020), as compliance even with foreign regulations is important, even if the firm doesn’t have a business presence here in Switzerland. The Swiss authorities have the possibility to sanction non-compliant firms at a supervisory level or on the basis of criminal provisions included in the new regulations. There are ways to enforce such sanctions even to firms based abroad, so there’s naturally a tendence to be compliant for financial services providers. Furthermore, it doesn’t really help a firm’s overall reputation if criminal charges are pending in another country. Now, it’s possible that e.g. smaller brokers will not implement the new rules here in Switzerland (perhaps due to negligence), but as a client, this type of behaviour doesn’t instill a lot of trust either, considering you’re willing to let them safeguard possibly a sizeable amount of your private wealth.

Is there no way to avoid all this?

Possibly. The accompanying ordinance to FIDLEG, which is still under consideration and therefore cannot be considered finalized, contains a so-called reverse-solicitation exemption (a construct that’s also present in the EU’s legislation). In a nutshell: A client has the possibility to contact a foreign broker and request from him e.g. to buy a specific financial product, even though this financial product isn’t being actively offered in Switzerland. For that exemption to be available, it is necessary that the foreign broker/bank doesn’t actively solicit the client beforehand about this product (e.g. send brochures, targeted online marketing etc.). If the conditions of the exemption are being met, FIDLEG/FINIG would not apply to that specific transaction and basically only the regulations in the country of the financial services provider would apply to this relationship. Reasoning behind this exemption: Clients should be allowed to decide for themselves whether they want to engage with a foreign broker/foreign financial product. If they do so willingly and consciously of the risks, the need for protection offered by the new Swiss regulation is waivered.

The big question here is: Are foreign brokers willing to accept these type of reverse solicitation-requests? As the reverse solicitation exemption isn’t really a clear cut and simple exemption, there is potentially some legal risk involved when they enter into these type of client relationships. It’s possible that most brokers will not really answer these kind of requests because integrating them into their business model could be costly and the demand could be weak. It certainly seems that Degiro and other European brokers have chosen to go down this route.

In the end, we will have to wait and see what happens next year, but from my point of view, the outlook doesn’t seem to rosy.


Well, if IB and others will really stop offering US ETFs to people domiciled in Switzerland, then the question remains if we should keep whatever we have in the US, or just sell it all and buy the Europeans ETFs.

If this terrible scenario really plays out, then I guess I will just buy the VWRL from that point. Then you could start asking yourself: should I keep my IB account, convert the CHF to USD and buy the USD variant of VWRL which is traded on LSE, or maybe just go with PostFinance or SwissQuote and buy the CHF one.

To look on the bright side, it would make life a bit easier:

  • I personally own a PostFinance account, so having my ETF there would be convenient
  • No more worries about the US Estate Tax
  • I could easily transfer money within the same bank
  • I would not have to bother with currency conversions
  • No need to bother with DA-1 and reclaiming withholding tax (not possible)

That being said, all the advantages of US ETF would go away:

  • lower TER
  • lower spread
  • lower fees of US stock exchange
  • possibility to reclaim withholding tax

All that could possibly mean 0.5% lower return per year, which is of course A LOT, especially when you compound it over 30 years…

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IB is still good and cheaper. And you can buy stocks on SIX just fine without any currency conversion for a 3-4CHF fee.

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An advisor is different from a broker.

Moreover, also in that document.
A prospectus must be prepared and published before securities or collective investments are offered or admitted to a Swiss stock exchange.

And the Prospectus requirements are significantly simpler than the EU requirements.

Oh, and you can opt-out if you have > 500k in assets and sufficient trading experience. (Or assets of 2 million without trading experience.)

And if you look elsewhere in the document, execution-only services (by Swiss-based companies) are also treated much more leniently than advice. So even if IB were Swiss (they aren’t), execution-only services still wouldn’t at risk.


In case you don’t believe me:

Regarding this point, you would have to rely on the broker implementing this check for you.

Wouldn’t that also require you to pay capital gain taxes?