Withholding taxes confusion

[Dr.PI]

Start here:

Splitting the world

An N+1st attempt to summarize information helping to optimize taxes arising from investments with ETFs. Some preliminary comments: I am going to mostly refer to MSCI indices. Their definition/composition can be found at msci.com (search for pdf factsheets). MSCI ACWI is all-countries index: 50 countries, 23 Developed Markets, 27 Emerging Markets. An up to date country weights can be found at ACWI | SPYY : SPDR® MSCI ACWI UCITS ETF (see Holdings → Geographical Weights).

The exact numbers have changed, but the qualitative picture is intact.

@Victor

But, if I’m not wrong, with the U.S ETF VT you lose X%(I dont’ know how much, I assume 15%) withholding taxes on not US equities, which are around 40%, still big number.

You lose them with a US ETF, but you also lose them with a IE ETF.

@Victor

Then come the Swiss withholding tax of 35%

No. This exists only for securities domiciled in CH. No withholding tax on dividends distributed by IE domiciled funds.

@Victor

I prefer to have an Irish ETF which can be CHF hedged so I don’t need to exchange from USD to CHF.

That is a poor excuse. There were some examples in the forum. With a very good dividend yield of 2% and a bad exchange fee of 1% you are losing 0.02% of your fund value per year on currency conversion. CHF hedging will hurt you more.

@Victor

But when you need the dividends as an income, CHF hedging starts having sense, or not?

No idea but I would say not. Hedging doesn’t save you from stocks drawdowns.