Since I can’t edit that post: As @jay noted in that thread, taxable income from accumulating Funds is not included in that report - this is the main thing missing but to keep in mind there, IMO. But U.S. domiciled ETFs are usually if not always distributing.
Thanks for the prompt reply @Burningstone . I’ll take a look at the link.
Good tip about the Steuerberater, I cross that out.
I understood the capital gain concept. Still don’t get what is a dividend, if one sells a stock after a while because it can get a good return, the profit in cash is considered dividend?
A dividend is cash paid out to you by the fund/stock, for funds mostly quarterly, for individual stocks mostly annually.
If you sell a position that’s not a dividend, that’s capital gain/loss.
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This is very good source of information. I appreciate that you covered various domiciles.
What is your opinion for Swiss domicile index funds.
If the TER is reasonable , lets say 0.20-0.25%, would a CH domicile world ETF be interesting? I understand that there is a reclaimable 35% witholding tax to be kept in mind , but it seems there is no L1TW tax loss because index funds can claim tax credit on behalf of investors just like individuals can.
No, that’s not correct, there’s no L1WT (to be specific the fund can fully reclaim these taxes) for dividends of swiss securities held by the fund (which is a neglectable amount in a typical global ETF), however there is L1WT for all other securities from other countries and ireland has clearly better DTAs than Switzerland.
From a tax perspective I see nothing that speaks for a CH domiciled global fund compared to IE or US funds, as such a large part of the world are US securities, for which both of these domiciles have bettet tax treatment.
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I see. When I asked UBS about a specific fund which is only investing in MSCI USA, I was told that UBS can claim back all the witholding tax in US on behalf of investors. Hence making withholding tax a non-issue.
Index fund in question was UBS passive MSCI US Index fund. Valor 35655041
seems this might not be the case as per your comment.
Swiss domicile is only good for funds on Swiss stocks. They are very tax-efficent! Otherwise don’t bother.
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Lol, this should be illegal to claim such nonsense. In addition the fund has a 1% subscription spread, that’s just ridiculous…
Hmm can’t it be true for some mutual funds? (That withholding can potentially be recovered)
Well. It was claimed by UBS themselves….
But I am happy that I did double check on this tax re-claimability part. I was sure that pension funds don’t have this issue but I was not sure what is the case for non-pension funds.
That’s why I asked the UBS contact.
Thanks for your time and quick feedback
Regarding 1%, I thought the following meant 0.01%. Does it actually mean 1% ?
“Dilution Levy in Favour of the Fund in/out 0.01 / 0.01”
Or you are referring to Issuing commission maximum 1% ?
I believe this number is subjected to where you buy the fund. It’s a maximum and not minimum.
That’s what UBS is saying.
I believe the principle is that since index fund always have controlled set of investors , they can theoretically prove that their Swiss resident investors are eligible for DTAA and hence a tax credit.
Iirc it works this way in some other EU countries (eg NL), would probably need to figure out which part of the dual taxation agreement specifies it.
At a glance I only saw mentions about pension funds in the swiss-us one.
Edit: should probably be obvious if that’s a well known index. A 15 or 30% extra withholding would be noticable if you can get the fund report.
I am not sure what withholding MSCI USA assumes. Maybe they assume 30% as standard while creating index calculations
Another complication is to compare returns because accumulating index funds with Swiss withholding tax would not have same returns as IE ETFs without any L2tw.
I fully understand VT (at IB) is best. Infact I use it myself. But I also would like to have an European ETF / Fund (for a portion of my portfolio) as alternate which can be bought via Swiss brokers. That’s why I was investigating this.
Looks like VWRL still wins even with Swiss stamp duties.
"The umbrella fund and sub-funds have no legal personality in Switzerland. They are subject to neither income tax nor capital gains tax.
The Swiss withholding tax deducted from domestic income in the sub-funds can be reclaimed in full by the fund management company for the relevant sub-fund. Any income and capital gains realised abroad may be subject to the relevant withholding tax deductions imposed by the country of investment. These taxes will, as far as possible, be reclaimed by the fund management company on behalf of investors resident in Switzerland under the terms of double taxation treaties or other such agreements."
https://www.ubs.com/2/e/files/ch_investment_fund_pech.pdf
Also (same source):
"FATCA
The umbrella fund and sub-funds are registered with the US IRS as registered deemed compliant financial institutions under model 2 IGA within the meaning of sections 1471-1474 of the US Internal Revenue Code (Foreign Account Tax Compliance Act, including the relevant orders, “FATCA”)"
…and at the IRS:
https://www.irs.gov/individuals/international-taxpayers/withholding-and-reporting-obligations
https://www.irs.gov/publications/p515#en_US_2023_publink100015355
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You’re not alone 
I have some VEUR.SW at Swissquote to give you an example.
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Ok, interesting didn’t know that this is possible, you learn something new everyday. 0.22% TER is still way too high for a passive US index fund.
PS: Someone please translate the legalese and tell me if (as the documentation and info given to @Abs_max kind of suggests to the layman?) these funds can be fiscally transparent, i.e. work as flow-through entities, with dividend distributions attributed to the Swiss resident personal investor, rather than the fund/fund company itself.
There’s a lamentable lack of tax lawyers well-versed in international taxation of securities investments on this forum. (That said, as someone considering himself interested slightly above-average in such matters compared to the average person on the street… if I were such a lawyer, I’d probably charge others the shit for my expertise and retire early, rather than giving it away for free on random internet forums).
I mean, how would they even pursue FIRE? Saving is hard when you have almost no taxable income to speak of. xD /joke.
Well. That’s true. But if they have tax advantage then maybe it’s a difference of 0.10% as well.
I am considering selling a part of my portolio of irish-domiciled ETF as the majority of my portolio is US-domiciled ETFs and it would probably save me another 100 CHF/year due to DA-1.
As I generally have a buy-and-hold strategy, I never sold stock before, so I was wondering if I might miss something obvious. I checked the professional trader rules and I know there is a lot of fear mongering and the chances of being recognized as professional trader are extremely low.
I just wanted to check if I might miss something.
The ETFs were bought more than 6 months ago, I would make gains from the sell but I have a job and it would not be 50% of my income. Moreover, I would reinvest everything in a US-domiciled ETF.
Does it make sense in cases like this to email the tax authority or is this completely unnecessary?
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