VIAC non-standard strategies and withholding tax

In his last article (Best pillar 3a 2022 Switzerland - Mustachian Post (aka Marc Pittet) #FIRE #frugalism) @_MP mentions that, in VIAC, standard strategies are better than individual strategies in terms of withholding taxes. Seems like, with individual strategies, ETFs are used and these are suboptimal in terms of withholding tax.

Is that correct? I can’t see any withholding taxes in VIAC’s report…

Custom strategies can use ETFs but you can also choose from exactly the same mutual index funds (CSIF) that are used in the standard strategies, in which case there is no downside.

3 Likes

I’ll take the opportunity to educate myself: I wasn’t aware of any different tax treatment of ETFs vs Mutual funds. Is there really one and where does that come from?

That being said, few of the custom funds in the custom strategies are ETFs. In addition, the funds marked “Pension Fund” and “Pension Fund Plus” have the advantage of pension funds when it comes to WHT. As far as I’m aware of, this involves WHT in the US and Japan.

Edit:
Yeah, ok, I see it’s probably derived from Finpension’s documentation that pits pension funds vs “ETFs”. This is a false dichotomy. “Pension Fund” share classes would admittedly not be provided in the form of ETFs (therefor, no ETF would have the benefits of a pension fund with regards to WHT) but not all mutual funds have pension funds benefits either. This isn’t a mutual fund vs ETF issue, it’s a “has this specific fund gone through the hassle of arranging WHT benefits with the proper tax authorities” issue, of which ETF share classes are not capable.

VIAC is fine. It used to have less WHT advantages for their World ex Global fund but as far as I know, since Japan has been included, they have the same benefits as Finpension on that specific fund. What I take out of this is don’t read too quickly, don’t trust blindly what is written in commercial papers and just because a provider has many “ETF” written in their available funds description doesn’t mean that all of the funds they provide are ETFs.

I use a large choice of there CSIF funds to build my portfoliothe closes ofVT.

Asset Class FX Name ISIN
Switzerland CHF CSIF SMI CH0033782431
Switzerland CHF CSIF SPI Extra CH0110869143
Developed markets EUR CSIF Europe ex CH CH0037606552
Developed markets CAD CSIF Canada CH0030849613
Developed markets USD CSIF Pacific ex Japan CH0030849654
Emerging markets USD CSIF Emerging Markets CH0017844686
Developed markets USD CSIF US - Pension Fund CH0030849712
Developed markets CHF CSIF World ex CH hedged - Pension Fund Plus CH0429081638
Developed markets JPY CSIF Japan - Pension Fund CH0357515474