The threat that changed the calculus
Section 899
In 2025, the United States came closer than most retail investors realised to fundamentally repricing the cost of holding US assets from abroad. The standard 30% dividend withholding rate on US equities could have climbed to 50%. Crucially, existing exemptions for sovereign wealth funds, state pension funds, and public enterprises would have been overridden.
The “One Big Beautiful Bill Act” passed by the US House of Representatives included a provision titled “Enforcement of Remedies Against Unfair Foreign Taxes” that became known as Section 899. It would have authorised countermeasures against investors and companies from jurisdictions the US deemed to impose “unfair foreign taxes,” explicitly targeting the OECD global minimum tax (Pillar Two), digital services taxes, and diverted profits taxes.
Section 899 was ultimately removed from the bill following “diplomatic negotiations”, or as we say on this side of Lake Geneva, tout le monde s’est couché devant eux 
But Section 899 is not gone. Senate Finance Committee Chair and House Ways and Means Chair have explicitly stated they “stand ready to revive retaliatory measures if other parties slow-walk implementation of that agreement.” Several countries, including major US trading partners, still maintain digital services taxes that the US views as discriminatory against American tech companies.
To the extent those taxes persist, Section 899 (or a successor provision) remains a loaded weapon that Congress has demonstrated both the will and the legislative mechanism to deploy.
The risk is structural and not resolved. Don’t count on Guy Parmelin or Karin Keller-Sutter, because… Well, just look at those F-35 
Estate tax
Non-US residents holding US-situs assets (which include US-listed ETFs such as VT) are subject to US estate tax at death on those assets above a $60’000 exemption. Unlike US citizens and residents, non-resident aliens receive no lifetime exemption beyond that $60’000 threshold. A Swiss investor holding Fr. 500’000 in VT at IBKR faces potential US estate tax exposure on nearly the entire amount.
Switzerland does have an estate tax treaty with the US that provides Swiss residents with a significantly higher exemption. However, this treaty protection is subject to the same structural vulnerability: it depends on the US choosing to honour and maintain it. Given the demonstrated willingness of Congress to use tax treaties and withholding rates as geopolitical leverage, relying on a bilateral estate tax treaty as a permanent shield would be, let’s face it, stupid.
Treaties can be renegotiated, suspended, or simply overridden by domestic legislation. Treaties may not exist tomorrow, and you have no control over that outcome. Just ask the Iranian people, they know 
Taken together, Section 899 withholding risk, estate tax exposure, and US custodial dependency, carry a structural concentration of US political and fiscal risk that is difficult to justify when cost-competitive European alternatives to the standard IBKR + VT setup now exist.
Broker: Degiro over IBKR for European ETFs
The “IBKR is cheapest” claim is only true for NYSE-listed ETFs. On SIX Swiss Exchange:
| Broker | Fee on SIX | Min fee | Stamp duty | Custody fee | Entity |
|---|---|---|---|---|---|
| Degiro | ~€2 flat | €2 | No | No | Dutch |
| IBKR | 0.05% | CHF 5 | No | No | US |
| Saxo CH | 0.08% | CHF 3 | Yes (+0.15%) | No | Swiss |
| Swissquote | 0.10% | CHF 9 | Yes (+0.15%) | Yes | Swiss |
Degiro wins on total cost. Swiss stamp duty adds 0.15% per trade on foreign securities. Degiro has no Swiss stamp duty as a foreign broker, and no US custodial exposure.
On a side note, I just played with OpenSteuerAuszug and it is promising, for both IBKR and Degiro portfolios: You can generate Swiss tax statements rather seamlessly. So far, I didn’t spot any errors and will certainly use it to declare my dividends moving forward.
Degiro caveat: execution quality
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Smart Order Router: Degiro routes orders either directly to market or via Morgan Stanley’s Smart Order Router depending on the venue. The SOR optimises for Degiro’s own criteria, which may not always align with obtaining the tightest spread for the end investor. This is a concern for less liquid ETFs where bid-ask spreads vary (sometimes by a lot, I’ve been burnt by this one!) across venues.
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PFOF: Payment for Order Flow has historically been a concern with Degiro (it’s the practice of routing orders to market makers in exchange for rebates) and it can disadvantage execution quality. The EU-wide PFOF ban takes effect on June 30th, 2026. However it is unclear whether we are safe from it. If we fall outside the scope of the ban, the execution quality improvement that EU retail investors will benefit from post-June 2026 may not apply to us.
In practice, for large liquid ETFs on SIX (ACWIS, EXUS, XMME) the spread impact is likely small. But for newer, smaller ETFs with thin order books, execution quality deserves scrutiny.
Switching to swap ETFs
A physical Irish UCITS ETF holding US equities pays dividends to the fund after the US withholds 15% at source (reduced from 30% via the Ireland-US treaty). On a ~2% dividend yield, this is approximately 0.30% per year permanently lost at fund level. As a UCITS holder you cannot file a DA-1 to recover this; the DA-1 only works for Swiss residents holding US securities directly.
A swap ETF does not hold US equities directly. It receives the gross total return of the index via a swap contract, meaning the full dividend is captured before any withholding. The advantage of the swap structure is the elimination of the irrecoverable foreign withholding layer.
On an unfunded swap structure, the counterparty posts collateral (typically G10 government bonds) to the ETF, which limits counterparty risk significantly. The EU’s UCITS rules also cap counterparty exposure at 10% of NAV.
Feel free to challenge my comparison for the US equity sleeve:
| VT at IBKR | Swap ETF at Degiro | |
|---|---|---|
| TER | 0.07% | ~0.05% |
| L1 US withholding drag | Recoverable through DA-1 | 0% |
| Swiss income tax | Yes | Yes (same) |
| Section 899 risk | Structural | Eliminated |
| US estate tax risk | Treaty-dependent | Eliminated |
New Portfolio: Cheap ETFs from European providers, listed in Zürich
| Sleeve | Weight | ETF | Interim (if AUM too small) |
|---|---|---|---|
| US equity | ~65% | Xtrackers MSCI USA Swap II UCITS (IE000PDUVTF3, 0.04%) | Amundi S&P 500 Swap (LU1135865084) |
| Dev. ex-US | ~25% | UBS MSCI World ex-USA UCITS (LU2807512947, 0.09%) | Xtrackers MSCI World ex-USA (IE0006WW1TQ4) |
| Emerging markets | ~10% | BNP Paribas Easy MSCI Emerging UCITS (LU3086273813, 0.09%) | Amundi EM Swap (LU2573967036) |
Deliberately excluded American providers: BlackRock iShares, Vanguard, SPDR, Invesco.
- Blended TER: ~0.057%, and no L1 withholding drag, versus VT’s 0.07% TER
- Your tax money stays mostly in Switzerland. Few rebalancing trades. No DA-1. No US broker. No US provider.
Single-fund alternatives (and none is perfect)
BNP Paribas Easy MSCI ACWI UCITS ETF (LU3086265710) is very young and has a LU ISIN, but also has a TER of 0.06%.
Xtrackers FTSE All-World UCITS (IE000L6ZMMC4) is even younger, and physical. But listed in Swiss francs in Zürich for 0.07%.
Good old Amundi Prime All Country World (IE0009HF1MK9 and IE0003XJA0J9) might be the honourable deal for those who insist on a single-fund portfolio. Physical replication, TER 0.07% and listed in Swiss francs with a sizeable AUM.
UBS MSCI ACWI SF (IE00BYM11H29, ticker ACWIS on SIX in CHF) is swap-based, Irish-domiciled, with approximately €1.7 billion in AUM. Its TER of 0.21% looks expensive compared to physical ACWI alternatives, but once you account for the absence of US withholding drag, it becomes competitive.
Open questions
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Any other European brokers worth considering for Swiss residents, with low flat fees on SIX and European custody?
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Are there better ETFs out there? Ideally:
- Swap, Unfunded
- IE-domiciled
- EU/CH provider
- Listed at SIX
- In Swiss francs.
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Do Swiss residents benefit from the EU PFOF ban at Degiro after 30.06.2026, or does it only apply to EU-resident accounts?
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What is your Degiro execution experience on SIX, particularly on spread quality via the Morgan Stanley SOR?
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Do you see errors in what I wrote?
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Do you have comments?
Thank you 
