VT taxation - Question on total tax burden

Taxes
1

Dear all,

I invest only in VT via UBS (I’m an employee there) and I have 2 questions about dividend taxation:

  1. do I understand correctly that the 30% tax rate applied to the latest dividends that I received was to be “expected” and that I can claim 15% back through DA-1 form?
  2. do I understand correctly that the gross dividend received also needs to be declared as income? Therefore if I receive for example CHF 1’000 in dividends in 1 year and I have an income tax rate of 25% I should theoretically pay 15% dividend withholding tax (CHF 150, after claiming back 15%) + 25% income tax (CHF 250), for a total of CHF 400 in taxes?

Many thanks!

2

30% (R-US) since it’s a swiss broker.

Yes you declare the gross dividends. FWIW I assume the UBS report will have the correct values (or if you enter it yourself, the data from ictax is correct).

1 Like
3

Thanks for the quick reply :slight_smile:

Therefore in my theoretical example above I would only need to pay the 25% tax rate on the dividend received as I could claim the 30% dividend tax via the R-US. Correct?

4

Correct in the general case, assuming the DA-1 is accepted (too low amount, or too many deductions can make them reject it).

5

Your net tax on the dividends would indeed be 25%. The 30% withholding is split into:

  • 15% US WHT for which you get a full tax credit in Switzerland via DA-1, assuming your average Swiss tax rate is >= 15% (details depend on deductions among other things)
  • 15% R-US for which you always get a full refund
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6

You guys are great. Very clear, thanks.

In terms of forms to claim back the taxes paid ie the famous “30%”, do I understand correctly that I will need to instruct my tax consultant to: use the DA-1 to claim 15% and use the R-US to claim the other 15%? Assuming that my consultant doesn’t know about this procedure yet.

Many thanks.

7

Yes, that would be reasonable instructions, although your tax consultant should know this, in my opinion. There are cantons such as ZH where R-US is simply an extra column on the DA-1 form while other cantons have separate forms for DA-1 and R-US. And in the tax software it might simply be an additional checkbox. I.e., the details depend on canton and tax software.

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8

You guys are amazing, many thanks for your help!

9

Hi @nabalzbhf I’ve just learned this today the hard-ish way, when discussing with my taxer.

I’ve got some dividends from VT (asset held in swissquote) which had 15% withholding tax and 15% additional tax. By having read Mustachian’s FAQ here and the post “withholding-taxes-on-dividends-received-concrete-examples” one would be convinced that everything, so the 15% + 15% would be recoverable. In practice, as you said, 15% are always recoverable via R-US164 and the other 15% (additional tax) is theoretically recoverable, it depends on how many deductions you have made in you whole declaration. I asked for the detailed information and was referred to this federal notice

In my case, due to the amount of deduction that I made (specially the deductible interests on the house credit) the result was that for the DA-1 I could not recover any tax. I wonder if going to VWRL ETF in Ireland, which has 0% tax wouldn’t be better for people in my case.

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10

@xnestico the topic has been discussed in detail in this thread

11

Thanks @weirded for the link to that thread, very interesting indeed and exactly what I went through. I’ve got a mortgage and due to deducting those interests, my DA-1 claim was refused. So my actual question is: Does anyone know of a thread/post where a discussion on the tax optimisation between Irish vs US ETFs has been held ?

It would appear from this FAQ and this post (Scenario 4) that US ETFs are better from a tax point of view, because you can recover the full 15% + 15% one way or another from the swiss tax authorities, while also benefiting from 0% L1WHT on us securities. But in light of the DA-1 acceptance criteria, it is at least not trivial to answer that US funds will be better than the Irish ones, because you’d get 0% L2WHT with those.

Any references to share or comments on this subject ? Thanks everyone.
@nabalzbhf

12

Beside this aspect, you might also want to take into account the effect of purchase costs (might be a bit higher for Irish ETFs on European stock exchanges) and liquidity of the specific ETF (which will affect bid-ask spreads and possibly your purchase price)