I’m writing about a topic that I understand little about, and unfortunately, even though it seems to have already been discussed on the forum, it still isn’t clear to me, so I hope someone can provide some information. I reside in the canton of Graubünden, have a C permit, and have been investing with Interactive Brokers for three years. From the beginning, I have filed my tax return requesting a refund of the U.S. withholding tax applied to my Vanguard Total World (VT) ETF, and I have always received the refund without issues.
Surprisingly, this year my refund was denied, with the explanation that my holdings are in the United Kingdom, which disqualifies me from the refund. I replied that I had received the refund in previous years, and they responded that I shouldn’t have received it in those years either and that it was their mistake. Fortunately, they also mentioned that they wouldn’t ask me to repay the amounts due to the elapsed time (thank goodness!).
In any case, I don’t think I am the only one in this situation, and I’m asking if anyone can confirm whether this decision is justified. Also, how do you handle it? For example, do you buy Vanguard VT through another broker (if a Swiss one exists from which you can buy this asset) or purchase a similar asset through a Switzerland-based broker?
I just spoke with the person in charge of my declaration. She is reaffirming that I asked correctly for the foreign witholded taxes. I will receive a refund of a 15% for those assets that are eligible of a refund BUT no refund at all for VT because it is an US-Asset and IB is based in the UK… this does make no sense at all to me because all my assets are deposited together in IB and therefore in the UK and I don’t see why it shold be differen for US-Assets but she explicitly confirmed this are the rules…
If this does not make sense to you either, what would you do in my position? Thanks
You received dividends of lets say 800 USD from VT. IB deducted 15% 120 USD because you had W8BEN filled in already
Now when you asked for 120 USD refund via DA1 form, the tax office rejected the claim because IB is in UK? The tax is not about brokerage, the tax is about security. Your security is in USA , so it shouldn’t matter if your broker is in UK or Uk or wherever outside CH.
This is very strange.
Sometime back someone else also mentioned the case for canton Schwyz. I am starting to think there is someone going on.
Where your broker is located doesn’t matter at all. VT is an US-Based ETF so with the Double Tax Treaty CH-US you can claim all the WHT.
Your tax officer is just incompetent and this is usual. To have study their training formation they don’t have any clue of what they are doing, they just do it mechanically and don’t ask their legal division about “tiny” problem like yours.
Ask her to have your tax declaration analysed by their legal division.
Not trying to be pedantic, but it simply may help when discussing this topic (with anybody, this forum, colleagues, tax officer), this US WHT withheld by IB (or a part thereof) is credited (aka Gutschrift) to you on your tax bill, and not refunded.
The “Zusätzlicher Steuerrückbehalt US Aktien” (withheld by Swiss brokers) is refunded.
This is why some people may think you are speaking of the latter, when you speak of a refund.
Thanks everybody for your answers and informations. As I said, I know very little about fiscality issues like these and I may be confusing some terms. Therefore I just had a deeper look. In Graubünden, besides of the bill regarding my income tax, I receive every year three different documents from regarding my assets declaration:
“Verfügung über die Verrechnungsteuer” (35%)
“Verfügung über den zusätzlichern Steuerrückbehalt USA”, and
Reason is that foreign brokers with correct W8BEN forms only deduct 15% from dividends. Swiss brokers are obliged to deduct additional 15% (+15% of withholding in US)
I also live in Graubunden and I am in exact same situation. My equities which bring dividends are stored in two brokerage accounts in: IBKR and Exante (Cyprus based). Previously when I lived in Kanton Zurich every year, I received some franks back after submitting DA-1.
This year Kanton Graubunden refused to return Steuerruckbehalt USA with the explanation:
“Der züsatliche Rüchbehalt USA wird nur auf Titeln gewährt, welche bei einer Schweizer Bank deponiert sind”?
So,if I understand this thread correct, if I had my equities in Swissquote, they would withhold 15%+15% tax but then I could claim it in full. Then I would add income from dividends to the annual income tax declaration, correct?
This sounds correct as has been explained in this thread. There is no “[zusätzlicher] Steuerrückbehalt USA” with foreign brokers such as IBKR, so there is nothing to refund in this regard. It seems like you’ve filled out the tax declaration incorrectly.
You should still get a tax credit via DA-1 for the 15% US WHT, if you’ve declared that part correctly, but the details depend on your individual situation.
In the best case you would get a tax credit or refund for both parts, yes. However, the end result is effectively the same as with IBKR. With a Swiss broker you’re forced to lend out an additional 15% until you actually get the refund, so IBKR is slightly better in this regard but there is no big difference.
By reading and partipating to this forum, you confirm you have read and agree with the disclaimer presented on http://www.mustachianpost.com/
En lisant et participant à ce forum, tu confirmes avoir lu et être d'accord avec l'avis de dégagement de responsabilité présenté sur http://www.mustachianpost.com/fr/
Durch das Lesen und die Teilnahme an diesem Forum bestätigst du, dass du den auf http://www.mustachianpost.com/de/ dargestellten Haftungsausschluss gelesen hast und damit einverstanden bist.
