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
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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
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[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.
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Dear Nugget,
is your excel https://docs.google.com/spreadsheets/d/1RihdVwvASX10avz57qIhSan4rI7qzzL2MpW9IbKJ3y4/edit#gid=0 right? MSCI EM IMI should have L1DW some percentage and not zero, no?
Thanks!
Miuko
@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
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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
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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
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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 ?
yes. what decides about the taxation is the domicile of the ETF, not the exchange where you buy it. VXUS is US domiciled
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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What I find puzzling is that there is no equivalent to VXUS in Ireland (All World ex-US). You have the VWRL which is no better than VT when you factor in the TER.
You can recreate the “MSCI world ex-US” with MSCI EMU + MSCI Pacific OR MSCI EMU + MSCI Pacific ex-Japan + MSCI Japan.
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Hi @nugget, given the above, why did you chose VXUS/VSS for your ex-US investments (instead of iShares) ? Did you run some numbers ?
I’m still trying to understand which would be the best choice to complement my VTI… 
sorry for not answering that long 
the question was why i would opt for US-based VXUS/VSS and not some IE-based alternative.
i decided for the US-based versions because
- they are from vanguard, which i consider is better than for example BlackRock (iShares), “conflict of interest”
- they have much more positions than comparable ETFs, i.e. are stronger diversified
- they are super cheap to trade, far greater volumes than IE-ETFs, and larger
- noone has lower TERs than vanguard
there are a few cons that I, in total, valued less than the pros:
- bulk risk of having all ETFs with one company (vanguard), in one domicile
- for non-US ETFs, holding US versions has a chance of being taxwise inferior (for VWO (EM) this is not the case, see the number in the example) to IE ETFs. overall the difference is very small. if i find out that it is till too big, the cost of swiching the ETF is very small.
- that issue with IRA & ineritance tax, which I believe is solved
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@nugget fantastic summary, thanks. Just to be precise: if I have VWRL IE based with CT, I don’t need to declare any DA-1, because there is nothing to gain, right? My losses are locked in during LW1T
Thanks grog 
I’d say yes, exactly.
one could try an manually calculate the LW1T losses from the fund annual reports and declare them with the DA-1. I have not deen any reports about this working out so far
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