US taxation of dividends

Taxes
1

Hello everyone,

As some of you here, I have an account on a US broker (IB), dealing exclusively with US stocks and ETFs, some of which declare dividends, and which have a withholding tax of 15% thanks to the US-CH treaty.

While declaring dividends to Swiss authorities for year end taxation is pretty clear to me, I’ve some doubts about how to declare dividends to US authorities. Reading through the IRS website, I’d declare my taxes as a non resident alien (NRA) using the Form 1040NR. At the same time, they seem to state that any NRA without a gross income who’s already being submitted to a withholding tax on dividends does not need to file any form, unless the dividends are being taxed at higher rate than what’s specified on the treaty.

As an example, if my only source of income from the US are dividends from US listed stocks and they’re taxed at 15% given the treaty I don’t need to file anything. If for some reason they’re being taxed at 30%, I can file the form to claim the difference.

Does anyone have any experience with this, or has had to file a tax form as an NRA?

Thanks in advance and keep up the good work. The info in this forum is really phenomenal.

HI

1 Like
2

If your only tie to US are the shares of American companies you don’t have to file US tax return, withholding tax is your only tax liability to US.

You say your dividends are already taxed at 15% , so what the heck more do you want? You get those 15% back from the swiss, not Mr Trump

4 Likes
3

That’s what I figured, hedgehog. Thanks for the input!

4

Hello everyone, has anyone double checked if it isn’t really necessary to fill the 1040-NR to get the 15% from the witholding taxes from USA equities?
I ask that because when I filled the DA-1 before, the tax office said that they didn’t have anything to give me back as IB is in the UK and they don’t hold the additional 15% withholding taxes. I found it strange because I was requesting the base 15% withholding taxes back and not the additional one.
Now I am preparing the new declaration and the field in the DA-1 is clearly defined as “DA-1nicht ruckfordbar” (not recoverable).
Any chances that they have changed those rules?

5

Did you check the “extra withholding USA” box in your tax filing? (that’s the only thing that would explain the response you got from the tax office)

6

Yes, probably at that time I first wrote the values on both fields: normal 15% and extra 15%, so they replied only that the additional 15% was not possible to give back because the bank is in the UK. But they also did not give me the other 15% back.

Now I am reading this pdf which says that the rule is to reduce from 30% to 15% but it is not staying that it will go to 0. So I wonder if anyone really could get this 15% from USA back.

https://www.google.com/url?sa=t&source=web&rct=j&url=https://www.estv.admin.ch/dam/estv/de/dokumente/intsteuerrecht/themen/auslaendische-quellensteuern-pro-land/u/usa.pdf.download.pdf/usa-d.pdf&ved=2ahUKEwivv5Hy4qDvAhUQAGMBHcFdAw8QFjACegQIFhAD&usg=AOvVaw3lryXqhXF9fGkWlBpFzNUe

7

If you were withheld 30% and are not with a swiss broker you should ask the IRS indeed.

8

Thanks for the reply!
And if I were withheld 15% from US and 0% from Switzerland? Is this also the case to ask IRS?

I saw the post in the blog telling that this should be written in the DA-1 and it would be recovered through the swiss tax declaration. As mentioned it is stated clearly “DA-1 nicht ruckforderbar” in the tax declaration software to the first 15% (not the additional/extra 15%)

9

Maybe send them the 1042-S showing the withheld amount to back it up (with a pointer to the treaty). That said up to you whether it’s worth your time, I had the impression that when you indeed file it wrongly (e.g. add the supplementary USA box), it’s often hard to recover.

(that said there might be other reason it’s no eligible, e.g. amount is too low, etc.)

10

Where is this so dangerous USA check box ?

11

In the St. Gallen DA-1 they divide in two columns:

  1. Betrag für pauschale Steueranrechnung
  2. Zusätzlicher Steuerrückbehalt USA

The first is meant for the 15% which was held in the source.
The second is meant only for the additional 15% which is held by Switzerland in case you use a Swiss Broker.

I filled the values in the second column instead of the first and they’ve declined my request. So I am trying to do it right this time.

12

Maybe I am misunderstanding but that 15% that IB deducts, is nicht-rückforderbar, as it is for stocks from many other countries (Germany,France, etc). And that means “nicht-rückforderbar”, from nowhere.
You can apply to get it angerechnet to your Swiss taxes because of DTA, that’s all.

13

Yes, I got it back no problem with DA-1
There’s no reason to deal with the US authorities if you’re with IB and have been withheld only 15% of the dividends from US domiciled ETFs.

In the DA-1 it’s called “non-refundable” because it’s not refunded back directly by the US, who’s actually keeping that 15% on their side. It’s Switzerland which discounts it from your taxes to avoid double taxation, but technically it’s not a refund.

Not a german speaker but Option 2 seems to be for dividends which require not only the DA-1 form but also the R-US 164 form. As you said it should only apply for US securities held through a Swiss Broker.

Go ahead with the DA-1 only and you should get your 15% back, assuming it’s more than 100 CHF.

1 Like
14

At the top of my form it says “Ausländische Dividenden DA-1/R-US164”, and both

are on it.
Is this really 2 forms in some Cantons?
I’d find that strange.

15

it’s 2 separate forms on the estv website itself:
https://www.estv.admin.ch/estv/fr/home/direkte-bundessteuer/direkte-bundessteuer/dienstleistungen/formulare.html
But I guess some cantons are trying to make it more user friendly in their web tools, which makes sense given that both forms require basically the same information to be filled in.