I invest only in VT via UBS (I’m an employee there) and I have 2 questions about dividend taxation:
- 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?
- 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?
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).
Thanks for the quick reply
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?
Correct in the general case, assuming the DA-1 is accepted (too low amount, or too many deductions can make them reject it).
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
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.
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.
You guys are amazing, many thanks for your help!
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.
@xnestico the topic has been discussed in detail in this thread
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.
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)