Does my strategy make sense?

Makis

New member
Hi all

I recently moved to Switzerland. 32M, family of 4 with 2 kids at the private kita.

I can save max 1K per month for investments right now. As soon as kids are in public school this will become 4K.

I have a Degiro portfolio mainly focused on VWCE. I have been converting CHF to EUR to invest there every month over the past 8y while been cross-boarder worker.

The conversation fee using WISE has been around 0.25% (I.e. less than 5 CHF for a 2K CHf to EUR conversion).

I am now looking into IBKR and VT as many Swiss investors do. However, I don’t see a big gain by switching to IBKR and VT in my case.

My Degiro fees are (base fiat is EUR in my Degiro):

- 2.5€ per year for connectivity fee
- 0.3% autoFX per month to convert CHF salary to EUR for investment
- 1€ transaction fee with Degiro

VWCE is accumulating but dividend tax is withheld internally (15%) as per Iceland - US treaty if I not mistaken

What would I really gain by switching to IBKR and VT? I am aware of the withholding tax on dividends and that in the case of VT it can be reclaimed.

Also, the total amount of dividends that I would receive in one year period is below 666CHF so I am below the limit of 100 CHF withheld at source in order to ask for tax credit using the DA-1 form
 
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Welcome to the forum Makis.

Here is what you would save:
  • You would pay only 0.03% per currency conversion (for 1000 CHF), which is 0.30 USD instead of 2.50 USD with Wise
  • You would pay 0.35 USD to buy VT instead of 1 EUR
  • You would save on the connectivity fee
  • Most importantly, VT has a TER of 0.07%, so you would save 0.15% of your invested value per year, which adds over time
  • And in the future, you will save 15% of the US dividends, but you indeed need to reach 666 CHF in dividends from VT which would take a portfolio of about 45'000 USD.
In the end, it's up to you to decide whether these benefits are worth changing broker or not :) Personally, I consider these a great gain, but this depends on each situation.
 
Welcome to the forum Makis.

Here is what you would save:
  • You would pay only 0.03% per currency conversion (for 1000 CHF), which is 0.30 USD instead of 2.50 USD with Wise
  • You would pay 0.35 USD to buy VT instead of 1 EUR
  • You would save on the connectivity fee
  • Most importantly, VT has a TER of 0.07%, so you would save 0.15% of your invested value per year, which adds over time
  • And in the future, you will save 15% of the US dividends, but you indeed need to reach 666 CHF in dividends from VT which would take a portfolio of about 45'000 USD.
In the end, it's up to you to decide whether these benefits are worth changing broker or not :) Personally, I consider these a great gain, but this depends on each situation.
Hi, thanks a lot for the reply and info.

I believe that the optimum solution might be to just let my current Degiro account sitting and start investing into VT with IBKR from now on. My current Degiro portfolio is mostly UCITS ETFs like VWCE. It just touched 6 figures so I am hesitant to sell all and go to VT and IBKR (or maybe even simply transferring my ETFs to IBKR from Degiro).

Some questions if you could help me.

1. I understand that the 15% withheld tax on dividends from UCITS (Degiro keeps 15% automatically internally I believe) cannot be recovered via the DA-1, right? This is also the e same regardless of the accumulating or distributing nature of the ETFs. Dividends from both are taxable.

2. And not only that but the received dividend amount is considered as income so it’s going to be again taxed according to the tax brackets of the canton?

I have just moved to Geneva and I am bit lost.
 
1. I understand that the 15% withheld tax on dividends from UCITS (Degiro keeps 15% automatically internally I believe) cannot be recovered via the DA-1, right? This is also the e same regardless of the accumulating or distributing nature of the ETFs. Dividends from both are taxable.
This is only for US dividends. And DEGIRO keeps nothing, it's actually the IRS keeping this money. But when the IRS keeps this money because it reaches a non US-fund (like a UCITS), this indeed is lost and cannot be recovered. And yes, same with distribution or accumulating, and taxes are the same as well.

2. And not only that but the received dividend amount is considered as income so it’s going to be again taxed according to the tax brackets of the canton?
Yes, your dividends are going to be taxed as income in Switzerland, just like your salary.
 
This is only for US dividends. And DEGIRO keeps nothing, it's actually the IRS keeping this money. But when the IRS keeps this money because it reaches a non US-fund (like a UCITS), this indeed is lost and cannot be recovered. And yes, same with distribution or accumulating, and taxes are the same as well.


Yes, your dividends are going to be taxed as income in Switzerland, just like your salary.
Thank you very much for the prompt reply.

The last thing I am trying to now estimate is how much dividends are my current investments generate. I found this website when I can, for example, find IWDA


For 100 shares, is 122.4 CHF the gross dividend amount that has been internally received and reinvested by the ETF?

If this is correct then I am above the 666 CHF gross income limit taking into account my total UCITS investments. I might end up selling everything and rebuying VT in IBKR :)
 

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