[quote=“Alex, post:28, topic:67”]
If you’re taxed at source you don’t have to file a tax return, but that doesn’t mean you can’t. [/quote]
No actually it’s quite possible that you can’t.
There are three distinct possibilities:
a) no right to file tax return at all, but you can still always request corrections to tax at source for pillar 3 etc. Beware of very short filing deadlines for it (31.03)
b) ergändende Veranlagung - where they compute additional taxes on your non taxed at sourced income such as dividends. Threshold in ZH is 200k wealth or 2500 extra income per year. You file a partial tax return for this, just the WV, they compute how much tax you owe in addition to tax at source. It’s probably possible that you can get withholding and foreign taxes refunded here. I don’t know what tax rates they use here, but I guess it can easily be higher than 15% for withholding taxes
c) ordentliche Veranlagung: full tax return and tax at source becomes just a prepayment for it. Beware of some nasty surprises here - if you live in a commune with high tax rate, such as Stadt Zürich, you’ll owe more than tax at source even without any extra income already
I can confirm that at least in Geneva you can still file a full tax return even with a B permit. It’s easier to just do a correction request and may actually be all you need, but they certainly accept the full return as well.
I think I’ve heard somewhere of exactly the opposite experience - GE refusing to process a tax return with income less than 500k (they have higher threshold than 120k in other cantons)
Maybe it varies by municipality, higher taxing ones should be more accepting as they get more tax in general in this way
Thanks for all of the informations. The only one problem is there is a little too much for an unsophisticated investor like me so I will try to resume what I extracted from this read.
From what I have understood for a Swiss resident the best is to invest in Ireland located ETF as it seems to be both the simplest and most efficient in term of taxes on dividends.
So if I am correct I should make a special effort to select those Ireland based funds. Vanguard.ch seem to offer only Ireland based ones:
When I buy VUSA though, e.g., Postfinance do I need to be extra careful to pick the proper Irish incarnation of the fund or is it even possible to make a mistake?
US-based funds are most tax efficient in terms of dividend taxes among funds for US or world equities. 0% withholding at fund level for all US stocks, and 15% on a payout to you with W8-BEN, reclaimable as a tax credit for your swiss taxes here
As explained by hedgehog, it’s better to buy the US based ETF.
Concerning VUSA, be careful to buy the one which is traded on the SIX echange in CHF.
Vanguard ETFs are traded on multiple exchanges with different currencies
I disagree here: for any ex-US part of a n ETF, the IE-based solutions have usually less tax burden when recieving dividends from the respecive companies. then, US based funds even add 15% (30% if you don’t do right) which IE based funds don’t.
example: VWO vs VFEM (FTSE EM) where the US based version ~triple the amount of losses due to taxes
[quote=“nugget, post:37, topic:67”]
I disagree here: for any ex-US part of a n ETF[/quote]
I only mentioned US and world, where US is a significant weight
Only if you’re taxed at source and can’t claim the taxes back by filing swiss tax return, in which case total withholding taxes is all you care about.
With ordinary taxation, fund-level withholding taxes are a loss and withholding on fund’s distribution is absorbed into your swiss taxes that you have to pay on fund’s distribution.
@nugget thanks for the great knowledge post. BTW, I saw the dividends are not equal so I corrected it. By the way, do you have a backup of that google sheet? Just in case of some troll?
I see that according to the sheet, the total cost for both VT and VWRL is around 0.50%. Now, do I understand correctly, that up to 0.3% can still be saved on VT if you send the DA-1?
The sheet shows nicely how the TER doesn’t matter that much, the taxes are the bigger costs.
hey,
it is quite some time back when i had my mind deep in that stuff. it’s basically rephrasing the according bogleheads articles.
hm, backup, good point ill make one.
as dividends vary over the years, you can play around, this is no precise information, only guesswork.
assuming tthe DA-1 works (i never did it but there is no reason that it should not): yes, the 15% L2WT would be credited for overall income taxation, effectively lowering it to zero. this corresponds to 0.3% saving. This represents the optimal way to go in the VT/VWRD topic.
yes, astonishing but true in the low-cost-area of ETFs.
no i don’t know why i left L1TW epty, probably because i was too lazy to calculate it. please, go ahead and read the topic on bogleheads, then you should be able to calculate it & fill it in.
L2TW is zero because as an IE domiciled fund, you as a swiss resident don’t pay any witholding taxes to ireland
Very informative – thanks! Can I ask about the liklihood of Capital Gains taxes withheld when not using a Swiss Broker (using IB, for example)? Upon the sale of shares with a realized gain on share price, are capital gains taxes withheld by the brokerage which could subsequently be reclaimed through my Swiss Tax Return? I am confused about this because I know capital gains for the sale of a property outside of Switzerland would still be subject to local capital gains taxes with no chance to reclaim, regardless of me living in Switzerland. Therefore I am trying to understand if such taxes are withheld based on my residency or based on the domicile of the brokerage or HOPEFULLY not all all! thanks
There should be normally no withholding for capital gains taxes for stocks. If you got some money withheld (e.g. in IRS backup withholding) you’re doing something wrong
I am confused about this because I know capital gains for the sale of a property outside of Switzerland…
Stocks are normally considered movable property and taxed at your tax domicile, unlike real estate
You usually have capital gains for selling real estate in Switzerland too, if you have the property for like less than X years. Only stocks, fund etf etc are capital gain free
Did I understand it correctly that buying an ETF like VXUS (international stock excluding US) in Ireland or in the US regarding taxation of dividends for a Swiss investor the same is ?
It seems like everyone is talking only about the US taxes. How about other developed countries? If you buy an ETF exUS with Europe and Pacific, what are the taxes on dividends there? What are the greediest countries to avoid?
It’s because the biggest and best ETFs are domiciled in USA. In Europe the most popular domicile for ETFs is Ireland, where the tax is 0%. But the tax is paid on three levels:
tax on the stock of the companies which are part of the ETF (like Apple - US, Nestle - CH, Toshiba - JP, Volkswagen - DE etc)
tax on the ETF (US, IE, CH)
final income tax that you will pay, and the ability to deduct what you already paid in point #2
for a sophisticated approach to the taxation topic, refer to my guide or the bogleheads source of my guide
as Bojack wrote, the majority of ETF is domiciled in US. any US domiciled fund that pays dividend to a swiss resident witholds 15% or 30% (depending on you broker & the W8-BEN issue) of the dividend. on top of that, the underlying assets (stock companies) first pay their dividends to the funds, where 0% is withold in case of US domiciled companies and many different percentages for all the countries that non-US companies are domiciled in.
then comes IE as second important Domicile, because any IE domiciled fund only witholds 0% of dividends paid to swiss residents. Typically IE has better tax treaties with foreign non-US countries than US, so the many different witholding percentages for all world wide non-US companies are on average lower than for US domiciled funds. US domiciled companies withold 15% of dividends when paid to IE domiciled funds.
oh its complex but make a drawing of this
there also exist FR & LUX as domicile countries, but i never saw numbers for these, and never actually intereting ETFs.
the very rugh summary of the above is
if your fund holds mostly US domiciled underlyings, go for and US domiciled fund
if your fund holds mostly non-US-domiciled underlyings, consider the IE domiciled fund
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ill make one.